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Your business’s legal structure has many ramifications. It can determine how much liability your company faces during lawsuits. It can put up a barrier between your personal and business taxes – or ensure this barrier doesn’t exist. It can also determine how often your board of directors must file paperwork – or if you even need a board. [Related article: What to Do if Your Business Gets Sued ]

We’ll explore business legal structures and how to choose the right structure for your organization. 

What is a business legal structure?

A business legal structure, also known as a business entity, is a government classification that regulates certain aspects of your business. On a federal level, your business legal structure determines your tax burden. On a state level, it can have liability ramifications.

Why is a business legal structure important?

Choosing the right business structure from the start is among the most crucial decisions you can make. Here are some factors to consider:

• Taxes: Sole proprietors, partnership owners and S corporation owners categorize their business income as personal income. C corporation income is business income separate from an owner’s personal income. Given the different tax rates for business and personal incomes, your structure choice can significantly impact your tax burden.
• Liability: Limited liability company (LLC) structures can protect your personal assets in the event of a lawsuit. That said, the federal government does not recognize LLC structures; they exist only on a state level. C corporations are a federal business structure that includes the liability protection of LLCs.
• Paperwork: Each business legal structure has unique tax forms. Additionally, if you structure your company as a corporation, you’ll need to submit articles of incorporation and regularly file certain government reports. If you start a business partnership and do business under a fictitious name, you’ll need to file special paperwork for that as well.
• Hierarchy: Corporations must have a board of directors. In certain states, this board must meet a certain number of times per year. Corporate hierarchies also prevent business closure if an owner transfers shares or exits the company, or when a founder dies . Other structures lack this closure protection.
• Registration: A business legal structure is also a prerequisite for registering your business in your state. You can’t apply for an employer identification number (EIN) or all your necessary licenses and permits without a business structure.
• Fundraising: Your structure can also block you from raising funds in certain ways. For example, sole proprietorships generally can’t offer stocks. That right is primarily reserved for corporations.
• Potential consequences for choosing the wrong structure: Your initial choice of business structure is crucial, although you can change your business structure in the future. However, changing your business structure can be a disorganized, confusing process that can lead to tax consequences and the unintended dissolution of your business. 

Types of business structures

The most common business entity types are sole proprietorships, partnerships, limited liability companies, corporations and cooperatives. Here’s more about each type of legal structure.

Sole proprietorship

A sole proprietorship is the simplest business entity. When you set up a sole proprietorship , one person is responsible for all a company’s profits and debts.

“If you want to be your own boss and run a business from home without a physical storefront, a sole proprietorship allows you to be in complete control,” said Deborah Sweeney, vice president and general manager of business acquisitions at Deluxe Corp. “This entity does not offer the separation or protection of personal and professional assets, which could prove to become an issue later on as your business grows and more aspects hold you liable.”

Proprietorship costs vary by market. Generally, early expenses will include state and federal fees, taxes, business equipment leases , office space, banking fees, and any professional services your business contracts. Some examples of these businesses are freelance writers, tutors, bookkeepers , cleaning service providers and babysitters.

A sole proprietorship business structure has several advantages.

• Easy setup: A sole proprietorship is the simplest legal structure to set up. If you – and only you – own your business, this might be the best structure. There is very little paperwork since you have no partners or executive boards.
• Low cost: Costs vary by state, but generally, license fees and business taxes are the only fees associated with a proprietorship.
• Tax deduction: Since you and your business are a single entity, you may be eligible for specific business sole proprietor tax deductions , such as a health insurance deduction.
• Easy exit: Forming a proprietorship is easy, and so is ending one. As a single owner, you can dissolve your business at any time with no formal paperwork required. For example, if you start a day care center and wish to fold the business, refrain from operating the day care and advertising your services.

The sole proprietorship is also one of the most common small business legal structures. Many famous companies started as sole proprietorships and eventually grew into multimillion-dollar businesses. These are a few examples:

• Marriott Hotels

Partnership 

A partnership is owned by two or more individuals. There are two types: a general partnership, where all is shared equally, and a limited partnership, where only one partner has control of operations and the other person (or persons) contributes to and receives part of the profits. Partnerships can operate as sole proprietorships, where there’s no separation between the partners and the business, or limited liability partnerships (LLPs), depending on the entity’s funding and liability structure.

“This entity is ideal for anyone who wants to go into business with a family member, friend or business partner – like running a restaurant or agency together,” Sweeney said. “A partnership allows the partners to share profits and losses and make decisions together within the business structure. Remember that you will be held liable for the decisions made as well as those actions made by your business partner.”

General partnership costs vary, but this structure is more expensive than a sole proprietorship because an attorney should review your partnership agreement. The attorney’s experience and location can affect the cost. 

A business partnership agreement must be a win-win for both sides to succeed. Google is an excellent example of this. In 1995, co-founders Larry Page and Sergey Brin created a small search engine and turned it into the leading global search engine. The co-founders met at Stanford University while pursuing their doctorates and later left to develop a beta version of their search engine. Soon after, they raised $1 million in funding from investors, and Google began receiving thousands of visitors a day. Having a combined ownership of 11.4% of Google provides them with a total net worth of nearly $226.4 billion.

Business partnerships have many advantages. 

• Easy formation: As with a sole proprietorship, there is little paperwork to file for a business partnership. If your state requires you to operate under a fictitious name ( “doing business as,” or DBA ), you’ll need to file a Certificate of Conducting Business as Partners and draft an Articles of Partnership agreement, both of which have additional fees. You’ll usually need a business license as well.
• Growth potential: You’re more likely to obtain a business loan with more than one owner. Bankers can consider two credit histories rather than one, which can be helpful if you have a less-than-stellar credit score.
• Special taxation: General partnerships must file federal tax Form 1065 and state returns, but they do not usually pay income tax. Both partners report their shared income or loss on their individual income tax returns. For example, if you opened a bakery with a friend and structured the business as a general partnership, you and your friend are co-owners. Each owner brings a certain level of experience and working capital to the business, affecting each partner’s business share and contribution. If you brought the most seed capital for the business, you and your partner may agree that you’ll retain a higher share percentage, making you the majority owner.

Partnerships are one of the most common business structures. These are some examples of successful partnerships:

• Warner Bros.
• Hewlett-Packard
• Ben & Jerry’s

Limited liability company 

A limited liability company (LLC) is a hybrid structure that allows owners, partners or shareholders to limit their personal liabilities while enjoying a partnership’s tax and flexibility benefits. Under an LLC, members are shielded from personal liability for the business’s debts if it can’t be proven that they acted in a negligent or wrongful manner that results in injury to another in carrying out the activities of the business.

“Limited liability companies were created to provide business owners with the liability protection that corporations enjoy while allowing earnings and losses to pass through to the owners as income on their personal tax returns,” said Brian Cairns, CEO of ProStrategix Consulting. “LLCs can have one or more members, and profits and losses do not have to be divided equally among members.”

According to Wolters Kluwer , the cost of forming an LLC comprises the state filing fee and can vary depending on your state. For example, if you file an LLC in New York, you must pay a $200 filing fee, a $9 biennial fee, and file a biennial statement with the New York Department of State .

Although small businesses can be LLCs, some large businesses choose this legal structure. The structure is typical among accounting, tax, and law firms, but other types of companies also file as LLCs. One example of an LLC is Anheuser-Busch, one of the leaders in the U.S. beer industry. Headquartered in St. Louis, Anheuser-Busch is a wholly owned subsidiary of Anheuser-Busch InBev, a multinational brewing company based in Leuven, Belgium.

Here some other well-known examples of LLCs:

• Hertz Rent-a-Car

Corporation 

The law regards a corporation as separate from its owners, with legal rights independent of its owners. It can sue, be sued, own and sell property, and sell the rights of ownership in the form of stocks. Corporation filing fees vary by state and fee category. 

There are several types of corporations, including C corporations , S corporations, B corporations, closed corporations, and nonprofit corporations.

• C corporations: C corporations, owned by shareholders, are taxed as separate entities. JPMorgan Chase & Co. is a multinational investment bank and financial services holding company listed as a C corporation. Since C corporations allow an unlimited number of investors, many larger companies – including Apple, Bank of America and Amazon – file for this tax status.
• B corporations: B corporations, otherwise known as benefit corporations, are for-profit entities committed to corporate social responsibility and structured to positively impact society. For example, skincare and cosmetics company The Body Shop has proven its long-term commitment to supporting environmental and social movements, resulting in an awarded B corporation status. The Body Shop uses its presence to advocate for permanent change on issues like human trafficking, domestic violence, climate change, deforestation and animal testing in the cosmetic industry.
• Closed corporations: Closed corporations, typically run by a few shareholders, are not publicly traded and benefit from limited liability protection. Closed corporations, sometimes referred to as privately held companies, have more flexibility than publicly traded companies. For example, Hobby Lobby is a closed corporation – a privately held, family-owned business. Stocks associated with Hobby Lobby are not publicly traded; instead, the stocks have been allocated to family members.
• Open corporations: Open corporations are available for trade on a public market. Many well-known companies, including Microsoft and Ford Motor Co., are open corporations. Each corporation has taken ownership of the company and allows anyone to invest.
• Nonprofit corporations: Nonprofit corporations exist to help others in some way and are rewarded by tax exemption. Some examples of nonprofits are the Salvation Army, American Heart Association and American Red Cross. These organizations all focus on something other than turning a profit.

Corporations enjoy several advantages. 

• Limited liability: Stockholders are not personally liable for claims against your corporation; they are liable only for their personal investments.
• Continuity: Corporations are not affected by death or the transferring of shares by their owners. Your business continues to operate indefinitely, which investors, creditors and consumers prefer.
• Capital: It’s much easier to raise large amounts of capital from multiple investors when your business is incorporated.

This structure is ideal for businesses that are further along in their growth, rather than a startup based in a living room. For example, if you’ve started a shoe company and have already named your business, appointed directors and raised capital through shareholders, the next step is to become incorporated. You’re essentially conducting business at a riskier, yet more lucrative, rate. Additionally, your business could file as an S corporation for the tax benefits. Once your business grows to a certain level, it’s likely in your best interest to incorporate it.

These are some popular examples of corporations:

• General Motors
• Exxon Mobil Corp.
• Domino’s Pizza
• JPMorgan Chase

Learn more about how to become a corporation .

Cooperative 

A cooperative (co-op) is owned by the same people it serves. Its offerings benefit the company’s members, also called user-owners, who vote on the organization’s mission and direction and share profits.

Cooperatives offer a couple main advantages.

• Increased funding: Cooperatives may be eligible for federal grants to help them get started.
• Discounts and better service: Cooperatives can leverage their business size, thus obtaining discounts on products and services for their members.

Forming a cooperative is complex and requires you to choose a business name that indicates whether the co-op is a corporation (e.g., Inc. or Ltd.). The filing fee associated with a co-op agreement varies by state. 

An example of a co-op is CHS Inc., a Fortune 100 business owned by U.S. agricultural cooperatives. As the nation’s leading agribusiness cooperative, CHS reported a net income of $422.4 million for fiscal year 2020. These are some other notable examples of co-ops:

• Land O’Lakes
• Navy Federal Credit Union
• Ace Hardware

Factors to consider before choosing a business structure

For new businesses that could fall into two or more of these categories, it’s not always easy to decide which structure to choose. Consider your startup’s financial needs, risk and ability to grow. It can be challenging to switch your legal structure after registering your business, so give it careful analysis in the early stages of forming your business. 

Here are some crucial factors to consider as you choose your business’s legal structure. You should also consult a CPA for advice.

Flexibility 

Where is your company headed, and which type of legal structure allows for the growth you envision? Turn to your business plan to review your goals and see which structure best aligns with those objectives. Your entity should support the possibility for growth and change, not hold it back from its potential. [Learn how to write a business plan with this template .]

When it comes to startup and operational complexity, nothing is more straightforward than a sole proprietorship. Register your name, start doing business, report the profits and pay taxes on it as personal income. However, it can be difficult to procure outside funding. Partnerships, on the other hand, require a signed agreement to define the roles and percentages of profits. Corporations and LLCs have various reporting requirements with state governments and the federal government.

A corporation carries the least amount of personal liability since the law holds that it is its own entity. This means creditors and customers can sue the corporation, but they can’t gain access to any personal assets of the officers or shareholders. An LLC offers the same protection but with the tax benefits of a sole proprietorship. Partnerships share the liability between the partners as defined by their partnership agreement.

An owner of an LLC pays taxes just as a sole proprietor does: All profit is considered personal income and taxed accordingly at the end of the year.

“As a small business owner, you want to avoid double taxation in the early stages,” said Jennifer Friedman, principal at Rivetr. “The LLC structure prevents that and makes sure you’re not taxed as a company, but as an individual.”

Individuals in a partnership also claim their share of the profits as personal income. Your accountant may suggest quarterly or biannual advance payments to minimize the effect on your return. 

A corporation files its own tax returns each year, paying taxes on profits after expenses, including payroll. If you pay yourself from the corporation, you will pay personal taxes, such as those for Social Security and Medicare, on your personal return. 

If you want sole or primary control of the business and its activities, a sole proprietorship or an LLC might be the best choice. You can negotiate such control in a partnership agreement as well.

A corporation is constructed to have a board of directors that makes the major decisions that guide the company. A single person can control a corporation, especially at its inception, but as it grows, so does the need to operate it as a board-directed entity. Even for a small corporation, the rules intended for larger organizations – such as keeping notes of every major decision that affects the company – still apply.

Capital investment

If you need to obtain outside funding from an investor, venture capitalist or bank, you may be better off establishing a corporation. Corporations have an easier time obtaining outside funding than sole proprietorships.

Corporations can sell shares of stock and secure additional funding for growth, while sole proprietors can obtain funds only through their personal accounts, using their personal credit or taking on partners. An LLC can face similar struggles, although, as its own entity, it’s not always necessary for the owner to use their personal credit or assets.

Licenses, permits and regulations

In addition to legally registering your business entity, you may need specific licenses and permits to operate. Depending on the type of business and its activities, it may need to be licensed at the local, state and federal levels.

“States have different requirements for different business structures,” Friedman said. “Depending on where you set up, there could be different requirements at the municipal level as well. As you choose your structure, understand the state and industry you’re in. It’s not ‘one size fits all,’ and businesses may not be aware of what’s applicable to them.”

The structures discussed here apply only to for-profit businesses. If you’ve done your research and you’re still unsure which business structure is right for you, Friedman advises speaking with a specialist in business law.

Max Freedman and Matt D’Angelo contributed to the writing and reporting in this article. Source interviews were conducted for a previous version of this article.

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Starting a law firm can be a rewarding and lucrative venture, but it requires careful planning and strategy. A well-crafted business plan is a crucial tool for any law firm looking to establish itself, secure funding, or grow its practice. The business plan will serve as a roadmap, outlining the law firm’s objectives, strategies, and unique selling proposition

Why Every Law Firm Needs a Business Plan

A well-structured business plan is imperative for every law firm, regardless of its size or specialization. While legal expertise is undoubtedly crucial, having a clear vision and strategic direction is equally essential. A business plan serves as a guiding light, defining the firm’s mission, values, and long-term goals. This clarity is vital for aligning the entire firm towards a common purpose, ensuring that everyone understands the objectives and the path to achieving them. Without a business plan, a law firm may find itself navigating uncertain waters, reacting to circumstances rather than proactively pursuing its ambitions.

The Key Components of a Law Firm Business Plan

A well-structured law firm business plan consists of several key components, each playing a crucial role in guiding the firm’s operations and ensuring its long-term success. Here are the essential elements of a comprehensive law firm business plan:

• Executive summary
• Law firm description
• Market analysis
• Organization and management
• Services 
• Marketing Strategy
• Financial plan
• Start-up budget

Section One: Executive Summary

The executive summary is arguably the most critical section of your law firm’s business plan. While it appears at the beginning, it is often written last, as it serves as a concise yet comprehensive overview of your entire plan. This section should capture the reader’s attention, providing them with a clear understanding of your law firm’s essence, mission, and what to expect from the rest of the document. In your executive summary:

• Introduce your law firm: Briefly describe your law firm’s name, location, and legal specialization.
• Mission and vision: State your firm’s mission and vision, highlighting your commitment to serving clients’ legal needs effectively.
• Your unique selling proposition: Clearly state your USP, and present what is unique about your firm that will ensure success.

The executive summary sets the stage for your entire business plan. It should be a concise yet compelling introduction to your firm’s mission, values, and potential. If crafted well, it can grab the reader’s attention and encourage them to explore other sections in detail. If you feel overwhelmed by this, you can write this section last. 

Section Two: Law Firm Description

This section of your business plan provides a deeper dive into your firm’s background, history, legal specializations, and legal structure and ownership. This section should provide a concise yet informative overview of your firm’s identity and history. Here’s what this section should cover:

• Mission Statement: Briefly reiterate your law firm’s mission statement. This statement should encapsulate your firm’s overarching purpose and guiding principles.
• Geographic Location: State out the physical location of your law firm’s office(s). This should include the city or region where your primary office is situated.
• Legal Structure and Ownership: State the legal structure of your law firm, whether it’s an LLC, S-Corp, or another legal entity. This choice is a fundamental aspect of your business model, influencing ownership, liability, and taxation. If your firm’s ownership is not that of a sole proprietorship, provide details on the ownership structure. Explain how the chosen structure aligns with your firm’s business model, decision-making processes, and long-term goals.
• Firm History: Provide the history of your law firm. Highlight key milestones, achievements, and notable moments in your firm’s journey. If your firm is well-established, briefly summarize its history, showcasing your accomplishments and contributions to the legal field.

Remember that brevity is key in this section. Don’t spend too much time, just touch on important points and achievements. 

Section Three: Market Analysis

A well-conducted market analysis will not only demonstrate your understanding of the legal industry but also inform your law firm’s strategies and decision-making. It goes beyond understanding your competition; it delves deep into your potential clients’ needs and expectations. 

Through market analysis, you can segment your target market based on demographics, industry, legal needs, and preferences. This segmentation allows you to tailor your services to meet the specific needs of different client groups. It also helps you identify the pain points and challenges that potential clients face. By understanding their concerns, you can offer solutions that directly address these pain points.

Your market analysis should also reveal the pricing strategies of your competitors. By benchmarking your pricing against theirs, you can position your services competitively. You can choose to price higher if you offer unique value or lower if you aim to attract price-sensitive clients. Your market analysis should reveal areas where your competitors may be falling short. Use this information to frame your services as the solution to these weaknesses. For example, if competitors have slow response times, emphasize your firm’s commitment to timely communication. 

Showcase your firm’s USPs that directly address client needs and preferences. If you excel in a particular practice area, have a reputation for excellent client service, or offer innovative fee structures, use these strengths to attract your preferred clientele. Ultimately, a well-documented market analysis not only informs your law firm’s business model but also guides your approach to client acquisition, pricing, and service delivery. It ensures that your legal services align with client expectations and positions your firm for success in a competitive legal industry

Section Four: Organization and Management

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This section provides a clear picture of your firm’s internal structure and leadership. Name the key stakeholders in your law firm and what they bring to the table. Highlight any unique experiences or expertise that each partner brings to the firm. This could include prior work at prestigious law firms, involvement in landmark cases, or specialized knowledge in a specific area of law. Explain how these experiences set your firm apart and enhance its capabilities. You can also include an organizational chart that visually represents your law firm’s structure. This chart should showcase the hierarchy, roles, and reporting lines within the firm. By including the names, educational backgrounds, unique experiences, and organizational chart, you paint a comprehensive picture of your law firm’s leadership and structure. This not only builds confidence in your team’s capabilities but also showcases the depth and expertise of your staff to potential clients, partners, or investors.

Section Five: Services

This section is the core of your law firm business plan. Here, you will go into detail about all aspects of your services. Present in simple words:

• The problem(s) your law firm is addressing and your approach to how to alleviate those pain points? Answer these questions, and provide in detail how your firm is in the best position to tackle this problem. 
• The solution(s) you are providing. This should describe how your law firm resolves your prospective market’s needs. This should include the work you do, and the benefits that each client will receive if they work with your firm. 
• Your law firm competition.  This should describe what advantages your law firm has over your competitors? What you do differently when providing your solutions and how your clients will gain additional benefits when they work with your law firm.

Section Six: Marketing Strategy

As you craft your business plan, keep these four essential questions in mind:

• What Is Your Firm’s Value Proposition? Clearly define what sets your law firm apart from others. This should guide your marketing and sales strategies, emphasizing the unique value you offer to clients.
• Who Is Your Target Audience? Identify your ideal client profile. Understanding your target audience helps tailor your marketing efforts to reach those most likely to benefit from your services.
• What Are Your Growth Goals? Set specific, measurable growth goals for your firm. These goals should inform your sales and marketing strategies, outlining how you plan to achieve them.
• How Will You Measure Success? Determine key performance indicators (KPIs) to measure the success of your marketing and sales efforts. Whether it’s tracking client acquisition rates, website traffic, or revenue growth, having measurable metrics will help you gauge your progress and make informed adjustments.

It is also valuable to perform a SWOT analysis (Strengths, Weaknesses, Opportunities, Threats) to assess your law firm’s internal and external factors. Describe your online marketing efforts, including your website, social media presence, and email marketing campaigns. Explain how you plan to leverage marketing  to reach and engage potential clients effectively. You should also define your pricing structure and fee arrangements. This may include hourly rates for specific legal services, retainer agreements for ongoing representation, or flat fees for standardized services. 

Section Seven: Financial Plan

If you want to expand your law firm and ensure a steady income, it’s essential to create a financial strategy for your practice. While you might not have all the answers regarding your firm’s finances, provide comprehensive details. Your goal should be to establish a financial plan, particularly for the initial year of your firm’s operation.

Provide comprehensive financial projections that cover the anticipated income, expenses, and cash flow for your law firm. These forecasts should offer a clear picture of how your firm expects to perform financially. You should also Incorporate income statements, which show your firm’s revenue and expenses, balance sheets that detail your assets and liabilities, and cash flow projections, which illustrate how money moves in and out of your business. These financial statements offer a holistic view of your firm’s financial health.

Explain the assumptions underlying your financial projections. This may include factors like growth rates, market trends, client acquisition strategies, and pricing models. Describe your strategies for achieving growth and how they translate into financial outcomes. This section is critical for demonstrating your law firm’s financial preparedness and sustainability. Investors, lenders, or partners will scrutinize these sections to assess the viability of your firm, making it essential to provide detailed and well-supported financial information.

Section Eight: Start-up Budget

When developing a business plan for your law firm, it is essential to create a realistic startup budget. This involves carefully considering various initial and ongoing expenses and factoring them into your revenue objectives. Here are some instances of expenses to incorporate into your budget:

• Hardware costs, such as laptops, printers, scanners, and office furniture.
• Office space expenses, whether you plan to rent space or work from home.
• Malpractice insurance fees.
• Staff salaries, including potential hires like administrative assistants or paralegals.
• Utility expenses, covering phone and internet services, among others.
• Expenses on practice management software or other tech tools

After itemizing these costs, review them thoroughly. Clearly state the total amount of funding you require to start and sustain your law firm. Explain how this funding will be allocated, including how much goes into covering startup costs and how much is reserved for ongoing operations. Be specific about the purpose of each funding component. 

Additionally, explore tools and solutions that can streamline non-billable tasks, freeing up more time for your legal practice. This not only enhances your overall productivity but also allows you to allocate more time to your legal practice. One exceptional solution that can significantly benefit your law firm operations is a legal practice management software. 

DigitsLaw: The Legal Practice Management Software for Law Firms

DigitsLaw is an all-in-one practice management software that streamlines and simplifies the day-to-day operations of a law firm. Whether you are a small firm or you have law firms in major cities, DigitsLaw can meet the unique needs of your legal practice. Our simple and intuitive tool offers a wealth of features that can make a substantial difference in the success and efficiency of your firm.

Here’s how DigitsLaw can help your new law firm scale:

• Effortless Case Management: DigitsLaw simplifies case management by centralizing all your client information, documents, and communications in one secure location. This ensures that you have easy access to everything you need, right at your fingertips.
• Time Tracking and Billing: With DigitsLaw, tracking billable hours and generating invoices is seamless. You can accurately record your time, expenses, and activities, allowing for transparent and error-free billing processes.
• Conflict Check: DigitsLaw provides a robust conflict check system that assists law firms in maintaining ethical standards and preventing conflicts of interest. By incorporating DigitsLaw conflict check capabilities into your law firm’s workflow, you can enhance your due diligence processes, reduce the risk of conflicts of interest, and uphold the highest ethical standards in your legal practice. 
• Client Collaboration: Foster better client relationships through DigitsLaw’s client portal . Clients can securely access case information, share documents, and communicate with your firm, enhancing transparency and trust.
• Legal Document Management: Say goodbye to the hassle of paper documents and disorganized files. DigitsLaw enables efficient document storage, organization, and collaboration, saving you time and reducing the risk of errors.
• Secure and Compliant: DigitsLaw prioritizes security and compliance, ensuring that your client data and sensitive information are protected at the highest standards.

By leveraging DigitsLaw’s capabilities, you can significantly reduce administrative overhead, minimize errors, and provide a more streamlined and responsive experience for your clients. It’s a strategic investment that will pay dividends as your firm grows and prospers.

Sample Business Plan and Fillable Template

If you’re in the early stages of creating your business plan, we’ve prepared an example that can serve as a reference. You can also download a blank version of our template here. Remember to tailor your plan to your specific requirements and objectives. 

Download your copy of our law firm business plan template HERE

Final thoughts.

In conclusion, crafting a law firm business plan is not just a formality; it’s a roadmap that guides your firm toward success. Whether you’re launching a new law firm or seeking to revitalize an existing one, a well-thought-out plan helps you.  From defining your firm’s mission and values to conducting a thorough market analysis every section of your plan plays a crucial role in shaping your law firm’s journey. It’s not just about impressing potential investors; it’s about setting clear goals, making informed decisions, and ensuring that your firm is well-prepared for the challenges and opportunities that lie ahead.

As you start planning, remember that your business plan is a living document. It should evolve and adapt as your firm grows and the legal industry changes. Regularly revisit and update your plan to stay aligned with your mission, serve your clients better, and achieve your long-term vision.

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• Six best practices for legal operating models

The pressure to transform legal operating models is reaching new heights.

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Amid increasing regulation, scrutiny and pressures on costs, today’s legal teams are facing new demands to deliver legal services more efficiently and drive more value. With COVID-19 having caused even more disruption, the pressure to transform legal operating models is reaching new heights.

As Heads of Legal are called on to do more with less at a time of rising regulatory and financial risk, they must also manage rising internal scrutiny from boards and senior management over how they are governed and operated. The legal function is no longer considered a black box that is exempt from performance management concerns. Like other functions, successful legal teams will likely be those that demonstrate how they are improving their efficiency and creating value.

As they transform their legal services operating models, legal teams can draw on a growing body of leading practices. Ongoing market analysis[1] reveals strategic measures that can pay off in boosting legal departments’ efficiency and effectiveness across six key dimensions:

Organization — arranging the function by tasks and risk

Processes — optimizing core processes to address key legal objectives.

Sourcing — identifying the right resource mix

People — ensuring the right skills in the right place at the right time

Technology — integrating solutions holistically and strategically

Performance — defining meaningful measures.

Those companies that have embraced these leading practices in their approach to legal operations seem to have weathered the crisis more successfully. And no matter how far along companies were in this regard before the pandemic hit, COVID-19 accelerated efforts to transform legal services operations across the board.

Traditionally, the legal functions of international companies are often set up to mirror the company’s geographic or functional business structure. Lawyers in one country or business unit may not be fully aware of what approaches and positions are being taken in other countries or units, and this can bring significant inefficiency and risk.

But when these silos are removed — when legal functions are set up so that the general counsel leads the department globally, with influence over decisions on matters like human resources, technology investments and process improvements across the company — efficiency follows.

In fact, structures that give the general counsel and head of legal operations the scope to define all aspects of the target operating model and the power to enforce their decisions company-wide stand to realize cost savings from nine to 16 percent, [2] depending on the industry.

The best structure for the legal function differs widely by company and by sector, and it needs to center not only on tasks but also on the risks and opportunities that face the organization overall. This broader context should drive structural decisions such as the legal team’s size, how and where lawyers are deployed, and whether to open or close local legal departments in particular locations. Defining the right governance and controls to ensure the operating model runs as designed is also key.

Legal department processes generally include both support processes, which include back office work like archiving and spend management, and the core processes of managing specific legal issues.

In the past, many legal teams focused on defining and standardizing their support processes. This helps prompt lawyers in the organization to maintain files and documents in a consistent way, corresponding with the types of matters they are handling (e.g., M&A transactions, litigation, tax matters).

More recently, attention is turning to defining and streamlining the legal function’s higher value core processes. Many companies are standardizing how and when the business should seek the legal function's involvement, for example, by using decision trees or other common processes.

Global contract management is another core process that we’ve seen potentially benefit from company-wide harmonization. Legal teams can speed up the process and drive more value by having common directions for designing contracts, internal approvals, signing, and archiving contracts.

Streamlining core functions such as litigation and M&A or those involving intellectual property can be more difficult, but detailed process mapping often reveals opportunities for gains in optimizing aspects of these activities as well – for instance, in standard processes for e-discovery, or transaction due diligence.

Sourcing — identifying the "right" resource mix

When it comes to sourcing legal services internally, externally and through automated means, we recommend taking a strategic approach — again based on tasks and risk.

For each of the legal function’s various tasks, determining the right providers involves considering:

• the task’s relevance to the broader business strategy
• the task’s complexity
• the risk framework of legal issues involved
• the potential to standardize the task
• the volume of the work, and whether it is expected to increase.

In cases where significant time is spent on high-volume, low-risk legal work, such as trademark tasks or processing non-disclosure agreements, it may make sense to outsource these activities to free up the legal team’s time for higher-priority work where their legal insights will make more of a strategic difference. It’s also possible that these activities could be automated or carried out by alternative legal service providers.

Internal teams might also want to have external counsel deal with high-value work that may be outside the ordinary course of business, such that they do not have relevant expertise resident in their legal teams. For example, a company may want to bring in external legal counsel to respond to a hostile takeover bid. However, if the company is pursuing a strategy of aggressive growth through acquisitions, then it might make sense to build M&A legal capabilities in-house.

In short, for some high-value, high-risk work, relying on external legal specialists may be essential.

People — deploying the right skills in the right place at the right time

Once you’ve assessed the legal function’s target operating model based on organization, processes and sourcing, a next step is to define the competencies you need to support it. Do you have the right people in the right place at the right time to meet legal service needs across the company?

A goal of this analysis may be to transform the traditional legal function hierarchy into something much more agile and cost-effective. Rather than a pyramid-shaped structure, with tiers of lawyers at various levels led by the general counsel at the top, a more strategic model looks like a rocket. This model eliminates many of the lower-tier lawyers on the pyramid’s sides, replacing those on the right side with paralegals, for example, and those on the left with legal operations and technology specialists. This leaves a leaner, central column of lawyers available to service the business’s higher-risk, higher-value legal needs.

Although lawyers can often be risk-averse where technology is concerned, legal technology can play a vital role in supporting legal operations. The current market for legal technology is somewhat fragmented, dominated by single-point solutions that only serve specific needs or subsets of people and don’t necessarily communicate or interface well with other systems. Looking ahead, however, legal services technology is evolving toward more holistic solutions that are better integrated into the business’s broader technological infrastructure.

There’s no doubt that digitalizing current processes often delivers positive outcomes. For example, automating standard contract forms and introducing self-service legal solutions such as chat bots can provide platforms that legal teams can leverage to provide scalable legal advice. Using technology for day-to-day legal tasks can also give legal teams business intelligence and insights into those areas of the business that require the most attention.

The key is to consider technology in a broader context that also takes into account skills, resourcing, stakeholders’ expectations and needs, and value. Legal teams need to design their target operating models first, and, as part of this, decide how technology fits into the bigger picture.

A final challenge in designing the target operating model is defining the right measures to evaluate and manage the legal team’s performance. Legal functions often lack the visibility and data they need to track the actual value they contribute.

The challenge lies in determining what sources of data your company’s systems can provide that present a true picture of the legal function’s operations. How these data needs can be met should be considered when any new technological solution is being adopted.

One of the most important things is to ensure key performance indicators (KPI) deliver a meaningful measure of performance. Simply tracking how many contracts a lawyer handles or how many M&A transactions are completed gives an incomplete view. These numbers don’t acknowledge the complexity, value or other aspects that could affect the volumes of transactions involved.

We recommend setting KPIs based on data input and data output in a way that highlights the performance and the effort involved. An example of this would be introducing a chatbot to respond to routine legal questions that were previously dealt with manually. If 100 percent of these requests five years ago (input) were serviced manually, and you find the chatbot is answering 80 percent of these questions today (output), this provides a clear measure of the tool’s performance.

Thriving amid ongoing disruption and risk

As COVID-19 and other disrupters – such as international and domestic political disputes, trade issues, and broader economic conditions – continue to create uncertainty and risk, legal functions need the agility to react quickly to new opportunities and threats, and to anticipate what’s coming next. These are exactly the purposes that a well-designed target operating model should achieve.

In particular, the shift to remote working in a fast-changing business environment highlighted the value of good processes, innovative technology and strong governance. Legal functions that were already on the path to target operating model transformation are proving to be nimbler and more effective as a result.

The imperative for legal functions to transform is clear. So is the path forward. By examining the legal function’s current state and investing in the six dimensions that have proven key to successful legal target operating models, organizations can transform their in-house teams into smaller, more agile business partners that create competitive advantage and deliver value.

For more information, let’s connect:

Andreas Bong Partner, Co-Leader Legal Operations Transformation Services KPMG in Germany

Eric Gorman Principal, U.S. Lead Legal Operations Transformation Services (LOTS) KPMG in the U.S.

1 Market analysis conducted by legal services professionals at KPMG member firms.

2 Based on analysis of client outcomes and experiences.

Legal services may not be offered to SEC registrant audit clients or where otherwise prohibited by law. KPMG LLP, the US member firm does not provide legal services.

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Exploring the impact of geopolitical change, business model evolution and increasing department digitalization on legal departments.

Geopolitical change, business model evolution and increasing department digitalization.

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• How to Draft an Effective Business Plan Considering the Legal Implications

The road to the creation of a new business is a long one that is often filled with unexpected challenges and accomplishments. While the unpredictable nature of starting a business can be appealing to some, for many there is value in developing a plan to help guide new owners through the first months and years of operation. For this reason, one of the most important steps that entrepreneurs can take when starting out is to carefully and thoughtfully develop a comprehensive business plan.

What Is a Business Plan?

A business plan is both a map and a marketing tool for your business. A business plan helps you carefully set forth the purpose, goals, and priorities of your new business, along with guideposts to help ensure that you stay on the right path. For instance, a business plan may require you to consider what the primary purpose of your business is, or the good or service you intend to provide, who your potential customers are, and how you intend to reach them in an effective and efficient manner. A business plan also allows you to make an honest evaluation of the current status of your business and what you will need to do to get to where you would like to be. This includes taking the time to compile your business balance sheet, analyze existing income and expenses, and determine anticipated financial needs.

Creating a detailed business plan can help business owners acquire outside funding .

In addition, a business plan serves as a marketing tool for new business owners who are attempting to gain financial backing, operational support, or mentoring for their new business. The financial aspects of a business plan lets potential funders or lenders analyze your current income streams and the likelihood of repayment, while the detailed explanation of your business objectives and operational plans helps to convince interested parties that you have taken the time to carefully plan your business endeavors and are invested in the success of your company.

How to Write a Business Plan

There is no one specific way to write a business plan. However, there are key components that most business plans should include, and these are good starting points when working on your own plan. It may also be worth reaching out to an experienced corporate attorney to help you review and revise your business plan before presenting it to others in the business community.

Business plans typically start with a summary of the business and its objectives, and then they describe the operations of the business, the good or service it will be providing, and potential income streams in more detail. Business plans should also include a detailed description of the proposed management structure of the business, including officers or directors and possibly the envisioned composition of the board. Additionally, business plans typically include extensive financial documentation, such as balance sheets, income projections or growth model projections, any pending loan applications, tax returns of the entity, and copies of any relevant legal agreements. If the business has already been in operation for some time, the business plan may also include financial records for the months of operation.

• Summarize the business and its objectives
• Outline how the business is organized and managed
• Describe what the business sells
• Identify potential income streams
• Include financial information, such as balance sheets and projections

Using Your Business Plan

Once you have completed a business plan that you are happy with, you will find that you will often continue to refer to your plan even months or years after it was initially completed. In the initial stages, you can use your business plan to attract investors, partners, board members, or other advisors who are interested in the model you have proposed and would like to contribute to its success. As your business develops, you can continue to refer to the plan to guide you in business decisions, as well as to track timelines or certain goals that you hoped to meet. Even after your business is well-developed, returning to your business plan can help guide your yearly planning for your company, allowing you to modify your goals as they are achieved.

Last reviewed October 2023

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Chapter 3/6

Developing a Business Plan for a New Law Firm

How to Start a Law Firm

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A law firm business plan is the foundation for everything your business does. Without a solid foundation, your firm will lack direction from the very beginning.

Starting a Law Firm Business Plan

A good business plan includes:

• Vision. Create a picture of what you’re building.
• Values. Identify the rules to guide your team’s important work. 
• Law Firm Business Model. What you offer, who you offer it to, and how you’ll deliver your services.
• Targets and Priorities. Clarify metrics that indicate success.

Law Firm Vision

We worked with a lawyer who was stressed out about his vision. He spent weeks on the assignment because he couldn’t think of a statement that would make his entire office happy. 

During one coaching session , he got that lightbulb moment when we told him that he was making too big of a deal of it. You don’t have to create the most amazing vision that perfectly captures everything you are hoping to build. You do need to start mapping out what you are (and aren’t) trying to create. 

Picture these two lawyers:

• Lawyer 1 wants to double the size of his team in the next two years so he can handle more cases, help more people, and make more money.
• Lawyer 2 does not enjoy managing people. She wants to build a technology-based solution that she can offer clients with a recurring monthly price and that is delivered using a few key team members.

Neither vision is wrong. But, how each lawyer will make decisions to build a profitable business will look very different. You need to get a sense if you are trying to build something that looks more like Lawyer 1, Lawyer 2, or Lawyers 3-8. Get it? 

Jot down thoughts now so you know where you’re headed and can start building the guardrails for future decisions.

Law Firm Values

Your values are a living embodiment of the firm culture you’re hoping to create and the approach to work your team shares. They are the guardrails of your business. 

From hiring to client management to a marketing strategy, every decision you make comes from your values. 

Your values are typically 3-6 factual statements that are authentically you. 

Here are some tips on crafting great values:

• Your values must concretely point to your business. You want achievable values that set your business up for success .
• Your values must have actual meaning. Like the “be the best lawyer” example, you want to avoid the obvious. Sure, every firm wants to be the best. But what, precisely, does your firm want to do that sets you apart from the crowd?
• Finally, avoid table stakes values. Honesty, integrity, and hard work are all good works that all companies should have. But, they have nothing to do with your specific goals vs. any other firm.

As an example, here are Lawyerist’s values :

• Build an Inclusive Community.
• Experiment Like a Lobster.
• Grab the Marker.
• Seek Candor.
• Grow as People.

Each of these represents the culture of our company (even “ Experiment Like a Lobster ,” which describes our playful and out-of-the-box thinking process). We use these values for all of our decisions, especially hiring. When we evaluate a candidate, we study their fit: Are they open to experimenting? Are they willing to help us build an inclusive community ? Are they eager to lean into candor and compassion ?

Building your vision and values is an essential first step for your business. We can’t tell you how much easier other decisions will flow once you have these documented. You will make better decisions and alleviate some of the anxiety of decision fatigue.

Law Firm Business Model

One of the biggest perks of starting your firm is deciding your law firm business plan and model. You get to take everything you learned in school and while working at other organizations and implement the parts you like. Even better, you get to leave out the details that stressed you out.

This is an excellent place to review your vision and values. Take the time to dream about this. This is often the most rewarding part for new law firm owners. With a smart strategy, you can build your dream firm.

Ask yourself:

• What kind of place do I want to work in every day? 
• What kind of clients do I want to serve? Who is my ideal client ?
• What type of pricing model do I want? 
• What kind of access to justice issues do I want to tackle?

You get the gist. The questions you can ask yourself here are endless, but use your vision and values to inform your model. For example, if one of your values is “ grow as people ,” you might offer education opportunities for clients in areas related to their cases. 

The important part is, it’s all up to you. This is yours. You get to decide.

Competitive Analysis

As part of finalizing your law firm business model, it can be very helpful to complete a competitive analysis. A competitive analysis not only forces you to define who your competitors are, it gives you a chance to determine what may be missing in the market so that you can address it. 

Lawyers often assume as long as they practice law, there’s a market for what they want to do. Or they think they’re only competing against other lawyers when clients are often drawn to non-law solutions. 

These lawyers are missing a huge opportunity. They aren’t asking clients how they heard about their firm. They’re not trying to figure out what other solutions their clients tried first. They aren’t looking at what clients want and how the market is attempting to respond.

Here are some tips for putting together a competitive analysis:

• Make a list of competitors. Simple, right? List firms in your practice area/location, your jurisdiction, and who may be serving your ideal client base.
• List the other ways your clients are solving their problems . Are they use an online service to create their will? Are they asking their cousin’s nephew’s wife, who once worked at a law firm in 1988, for advice? Get creative.
• Do field research . Ask your friends, family, and current clients what they do when they have a potential legal problem.

Once you’ve collected the data, you can begin the analysis. Think about the strengths and weaknesses of each competitor and the solution you’ve collected. Compare pricing, accessibility, marketing messages, and client service. How does it all compare to your firm? What do you do better? What could you improve?

And keep in mind: This isn’t a one-time deal. You’ll want to stay on top of competitive solutions through Google or social media alerts or by subscribing to industry emails and newsletters. At least once a year, do a complete forensic competitive analysis to see where things have changed.

Targets and Priorities

When you’re first starting a law firm business plan, you may just have a goal of “get my firm up and running.” A good goal! But, as you dream on your initial strategy, it’s helpful to set some initial short-term and excellent long-term goals. Yes, these goals may change as you learn and grow. But, setting goals upfront will give you a path to get started.

Short-term Goals

Look to your initial vision and values for your first goals. If you’re a family law firm that wants to do low-conflict divorces, you might have a client acquisition goal aligned with this.

For example, you could say: In the first six months of my firm opening, I want 50% of my new clients to be low-conflict separations and divorces. You’ll see this goal follows the S.M.A.R.T. formula: Specific, Measurable, Achievable, Relevant, Time-Bound. 

Another short-term goal might be systems-oriented: I want a written client onboarding process documented in my first three months. (If not implemented.)

Think through all the different parts of your business and see if you can achieve one short-term goal.

Long-term Goals

Long-term goals can be a little trickier when you’re first starting. Thinking one, two, or even five years out might seem impossible. But this is where you can begin to dream a little.

A long-term goal might be that in three years, you want a staff of five people, a complete operations manual, 50 new clients a year, and Fridays off each week. 

Remember, these goals might—and likely will—change. But give yourself something to work with in the beginning.

Key Performance Indicators (KPIs)

As you’re starting a law firm business plan, you’ll need  a way to measure your firm’s health. These measurements are called KPIs. They track goals in all parts of your business, from marketing to finances to client acquisition .

Measuring and monitoring your KPIs will allow you to:

• Monitor the health of your firm . KPIs will enable you to see how well your law firm is performing. For example, KPIs make it easy to track your finances and your firm’s monthly growth.  You’ll see problems and successes quickly and be able to take action by creating new goals or redirecting your team’s efforts.
• Simplify decision-making . Armed with the above information, you can make informed, rational decisions for everything in your business. You don’t have to guess if a decision is the right one. Instead, you can (and should) measure all variables to make the best decision for your firm’s future.
• Track your wins. By tracking your KPIs, you track your wins. Monitoring law firm data makes it simple to incentivize your staff’s hard work. After all, when you meet your numbers, everyone benefits.

For example, at Lawyerist, we track KPIs with a color-coded system.

Green means hitting our goal, yellow means we’re on the cusp, and red means not hitting the number. We track weekly, which means when something goes yellow, we can analyze and plan before it goes red.

And, because we track weekly, a one-week red doesn’t mean an emergency. It means we need to take time to discuss, find a cause, and make a plan.

Types of KPIs for Successful Firms

KPIs can cover all aspects of your business, including your finances, client satisfaction, marketing, and business development. Keep in mind, as you start your firm, KPIs will be new to you and can feel overwhelming. So, keep it simple in the beginning. 

Start by picking three business questions you want answered. Find a way to measure that answer that you can track and update without too much work regularly. Then, start measuring. As your firm grows, you’ll develop your KPIs.

Let’s look at some examples.

Financial KPIs

Want to increase your revenue or improve your law firm’s financial health? You’ll want to track some financial KPIs , including (but not limited to):

• Revenue (cash collected)
• Monthly amount invoiced to clients
• Accounts receivable (amount clients owe you)
• Budgeted expenses

Regardless of your goals, we recommend tracking some basic financial data to keep an eye on the health of your firm. For a quick win, narrow down your financial KPIs to the top three financial numbers  needed to understand your business.

Client Satisfaction KPIs

Your clients are your most valuable assets. Firm success requires that you watch specific metrics involving your clients. 

Client satisfaction KPIs connect to several key law firm growth goals. These include increasing referrals, increasing revenue (happy clients are loyal clients), and improving overall client experience. 

Examples of KPIs to track include:

• Net Promoter Score (NPS)
• Client retention rate
• Speed at which you close cases

Your Net Promoter Score measures whether current or former clients would recommend your legal services to others. A satisfied client is more likely to do so. This metric is most often gathered using a survey at the final delivery of your services.

Other measures, such as closing speed and retention, can give you insights into how happy your clients are with your services. Do you have a lower NPS than you expect? Are you losing clients? If so, your client satisfaction is low, and you could take action to improve it.

Marketing and Business Development KPIs

Is your current marketing strategy working? Without measuring KPIs, there’s no way of knowing. By tracking marketing metrics for your firm, you can see your marketing strategy’s performance and tweak where needed. 

Some of these metrics include:

• Organic traffic to your website
• Number of leads generated
• Conversion rates
• Acquisition costs/return on investment (ROI)

For example, if you see your website traffic trending down, some fresh content might do the trick. Or, if you see low conversion rates yet high traffic, your website isn’t inspiring potential clients to give you a call. You might need to change your call-to-actions or refresh your website.

Marketing and business development go hand-in-hand—as they’re both critical to achieving long-term growth goals.

Some examples of business development metrics to track include:

• Number of new clients each month
• Competitor pricing
• Sales cycle length
• Number of leads that turn into consultations

Profitability KPIs and Law Firm Financial Ratios

Every law firm should have a documented long-term financial strategy and profitability model. Any healthy business has a written plan to forecast revenue, expenses, net profit, and cash reserves. To ensure you follow through with your plan, track your firm’s profitability and financial KPIs.

And where should you track these KPIs? Don’t think too hard on that one. At Lawyerist, we use a Google Sheets  spreadsheet with a few simple formulas. Track anywhere that makes sense for your firm .

Next, we’ll outline how to use legal technology successfully.

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Lawyers often approach their work with a strong focus on client advocacy, research and legal strategy. While these are crucial aspects of practicing law, it’s equally important to recognize that running a law firm effectively requires a business-oriented mindset. Operating your law practice like a business not only ensures financial stability but also fosters growth, efficiency and long-term success. In this blog post, I’ll explore various ways in which lawyers can successfully manage their practices by adopting a more business-centric approach.

1. Develop a Clear Business Plan:  Just as any successful business starts with a well-defined business plan, your law practice should have a strategic roadmap. Your plan should outline your practice’s mission, goals, target clients, practice areas, financial projections and marketing strategies. Having a clear plan provides direction and helps you make informed decisions for the growth of your practice.

2. Effective Financial Management:  Managing the finances of your law practice is essential. This includes budgeting, tracking expenses, setting pricing structures and managing cash flow. Implement accounting software or hire a professional accountant to maintain financial records and provide insights on optimizing your practice’s profitability.

3. Marketing and Branding:  Effective marketing is key to attracting and retaining clients. Invest in building a strong online presence, including a professional website and active social media profiles. Develop a consistent brand image and engage in content marketing, including blog posts, articles and social media updates that showcase your expertise.

4. Client Relationship Management:  Building strong client relationships is essential for repeat business and referrals. Communicate clearly, set expectations and provide exceptional client service. Regularly solicit feedback from clients to improve your services and address any issues promptly.

5. Invest in Technology:  Embrace technology to streamline your operations and improve efficiency. Practice management software, document management systems and legal research tools can help you save time and enhance your service delivery.

6. Efficient Time Management:  Time is a valuable resource, and effective time management is crucial. Implement time tracking software to understand how you spend your work hours and identify areas where you can be more productive. Delegate tasks when appropriate to free up your time for high-value legal work.

7. Networking and Business Development:  Build a strong professional network within the legal industry and your specific practice area. Attend legal conferences, join bar associations, and participate in local business organizations. Networking can lead to referrals and valuable connections.

8. Embrace Innovation:  Stay up-to-date with legal technology trends and innovations. Explore alternative fee structures, such as flat fees or subscription models, to provide clients with flexible options while ensuring steady income for your practice.

9. Measure Key Performance Indicators (KPIs):  Identify and track key performance indicators that are relevant to your practice. These may include client acquisition cost, client retention rates, billable hours and revenue growth. Regularly review your KPIs to assess the health and progress of your practice.

10. Continuous Learning and Professional Development:  In the legal profession, staying current with legal developments and professional standards is vital. Invest in your ongoing education, attend relevant seminars, and pursue advanced certifications or specialization.

By adopting a business-oriented approach to your law practice, you’ll be better positioned to achieve your goals, provide excellent legal services, and ensure the long-term success and sustainability of your practice. Remember that while legal expertise is your foundation, a strong business mindset will empower you to thrive in an increasingly competitive legal landscape.

Key Takeaways

• Business Mindset Matters:  Operating your law practice like a business is crucial for long-term success. A business-oriented approach helps you make informed decisions, achieve financial stability and foster growth.
• Develop a Strategic Plan:  Start with a clear business plan that outlines your mission, goals, target clients, practice areas and marketing strategies. A well-defined plan provides direction and focus.
• Effective Financial Management:  Properly manage your finances, including budgeting, expense tracking, pricing and cash flow management. Seek professional help when necessary to optimize profitability.
• Invest in Marketing:  Building a strong online presence and consistent branding is essential for attracting and retaining clients. Create content pieces and leverage social media to showcase your expertise.
• Nurture Client Relationships:  Exceptional client service and clear communication are key to building strong client relationships. Solicit feedback to continuously improve your services.
• Leverage Technology:  Embrace legal technology to streamline operations and improve efficiency. Practice management software and document management systems can save time and enhance service delivery.
• Time Management:  Efficiently manage your time, delegate tasks when possible and prioritize high-value legal work.
• Network and Build Connections:  Cultivate a strong professional network within the legal industry and your practice area. Networking can lead to referrals and valuable connections.
• Embrace Innovation:  Stay current with legal tech trends and explore alternative fee structures to adapt to evolving client needs.
• Measure Performance:  Identify and track key performance indicators (KPIs) relevant to your practice. Regularly assess your KPIs to monitor progress and make data-driven decisions.
• Continuous Learning:  Commit to ongoing education and professional development to stay up-to-date with legal developments and industry standards.

By combining your legal expertise with a business-oriented mindset, you’ll not only provide exceptional legal services but also ensure the sustainability and success of your law practice in an increasingly competitive legal landscape.

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United States Business Law: Everything You Need to Know

United States business laws are relevant to the legal needs of newly created business, as well as the needs of existing businesses. 3 min read updated on February 01, 2023

United States business laws are relevant to the legal needs of newly created business, as well as the needs of existing businesses. This includes how the business interacts with other businesses, the public, its customers, and governing agencies. There are a variety of disciplines within the field of business law; some of these include tax law, intellectual property law, bankruptcy law, employment law, real estate law, etc.

Often, business law attorneys are hired for transactional work, and also to help a business avoid future litigation. When considering business law and its role within the legal system, it may be helpful to consider a business as a separate entity from the owners or employees. Businesses are subject to legal requirements in a similar way as individuals living together in society, and these rules are designed to give all participants a fair opportunity within the market.

Business Formation

Business formation involves the steps a new business must take to obey business laws. In this area, a common request for business law attorneys involves the preparation and filing of documentation surrounding the formation of a new entity. Some clients may need additional assistance, such as selecting the type of business entity that is the best fit for their company. There are quite a few types of business entities to choose from, and the appropriate type is dependent upon a variety of factors. The most common entity types include:

• Sole Proprietorship
• General Partnership
• Limited Partnership
• Limited Liability Partnership (LLP)
• Limited Liability Limited Partnership (LLLP)
• Corporation
• Nonprofit Corporation
• Limited Liability Company (LLC)

The purpose of most business entities, with the exception of a sole proprietorship or general partnership, is to shield the business owner from personal liability for incidents related to the business. A business law attorney can work with the business to achieve this goal by setting up and further customizing the business entity to meet the specific needs of the business.

Internal Agreements

Internal agreements are another responsibility a business law attorney may have during the formation of a new business. An internal agreement will need to be drafted in order to determine how the business will be managed. One example is an operating agreement for an LLC. An operating agreement governs how the profits and losses will be shared among the partners, how vital businesses decisions will be decided, and how ownership rights may be transferred. Due to the vital nature of this type of document, it must be drafted with extreme caution.

Navigating Complex Transactions

Some business owners may feel comfortable handling certain business transactions on their own. However, more complex transactions, such as internet commerce transactions or securities regulations, may be too complicated without an attorney. When businesses are part of a heavily regulated industry, they typically rely on in-house counsel or contract attorneys to provide assistance or advice regarding recent legal developments within their industry that may have an impact on their business. Generally, lawyers can provide valuable insight into these transactions due to their legal training and background, as well as their objective nature. Attorneys may be more likely to realize issues overlooked by the business owners, since the owners may be too emotionally invested.

Preemptive Measures to Avoid Litigation

Practicing attorneys in the field of business law are expected to be experts at constructing legal transactions that reduce a company's exposure to litigation. There are rules and regulations for businesses to follow before a dispute may occur, and by maneuvering these laws effectively, an attorney can greatly reduce business expenses. One example of these preemptive measures is an attorney who is hired to draft customer agreements. Including certain requirements in a customer agreement, such as requiring customers to follow specific procedures for disputes or only allowing disputes to be submitted in the company's home state, will increase the competitive advantage of the company.

Hiring Legal Counsel

An important part of launching a new business or operating an existing business is to hire legal counsel. Success in many areas of business may rely greatly on the company's ability to obtain proper legal advice. Business law attorneys are able to assist in a variety of areas, including purchase agreements, sales agreements, mergers, and acquisitions.

If you need help with United States business laws, you can post your legal need on UpCounsel's marketplace. UpCounsel accepts only the top 5 percent of lawyers to its site. Lawyers on UpCounsel come from law schools such as Harvard Law and Yale Law and average 14 years of legal experience, including work with or on behalf of companies like Google, Menlo Ventures, and Airbnb.

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How To Write A Business Plan (2024 Guide)

Updated: Apr 17, 2024, 11:59am

Table of Contents

Brainstorm an executive summary, create a company description, brainstorm your business goals, describe your services or products, conduct market research, create financial plans, bottom line, frequently asked questions.

Every business starts with a vision, which is distilled and communicated through a business plan. In addition to your high-level hopes and dreams, a strong business plan outlines short-term and long-term goals, budget and whatever else you might need to get started. In this guide, we’ll walk you through how to write a business plan that you can stick to and help guide your operations as you get started.

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Drafting the Summary

An executive summary is an extremely important first step in your business. You have to be able to put the basic facts of your business in an elevator pitch-style sentence to grab investors’ attention and keep their interest. This should communicate your business’s name, what the products or services you’re selling are and what marketplace you’re entering.

Ask for Help

When drafting the executive summary, you should have a few different options. Enlist a few thought partners to review your executive summary possibilities to determine which one is best.

After you have the executive summary in place, you can work on the company description, which contains more specific information. In the description, you’ll need to include your business’s registered name , your business address and any key employees involved in the business. 

The business description should also include the structure of your business, such as sole proprietorship , limited liability company (LLC) , partnership or corporation. This is the time to specify how much of an ownership stake everyone has in the company. Finally, include a section that outlines the history of the company and how it has evolved over time.

Wherever you are on the business journey, you return to your goals and assess where you are in meeting your in-progress targets and setting new goals to work toward.

Numbers-based Goals

Goals can cover a variety of sections of your business. Financial and profit goals are a given for when you’re establishing your business, but there are other goals to take into account as well with regard to brand awareness and growth. For example, you might want to hit a certain number of followers across social channels or raise your engagement rates.

Another goal could be to attract new investors or find grants if you’re a nonprofit business. If you’re looking to grow, you’ll want to set revenue targets to make that happen as well.

Intangible Goals

Goals unrelated to traceable numbers are important as well. These can include seeing your business’s advertisement reach the general public or receiving a terrific client review. These goals are important for the direction you take your business and the direction you want it to go in the future.

The business plan should have a section that explains the services or products that you’re offering. This is the part where you can also describe how they fit in the current market or are providing something necessary or entirely new. If you have any patents or trademarks, this is where you can include those too.

If you have any visual aids, they should be included here as well. This would also be a good place to include pricing strategy and explain your materials.

This is the part of the business plan where you can explain your expertise and different approach in greater depth. Show how what you’re offering is vital to the market and fills an important gap.

You can also situate your business in your industry and compare it to other ones and how you have a competitive advantage in the marketplace.

Other than financial goals, you want to have a budget and set your planned weekly, monthly and annual spending. There are several different costs to consider, such as operational costs.

Business Operations Costs

Rent for your business is the first big cost to factor into your budget. If your business is remote, the cost that replaces rent will be the software that maintains your virtual operations.

Marketing and sales costs should be next on your list. Devoting money to making sure people know about your business is as important as making sure it functions.

Other Costs

Although you can’t anticipate disasters, there are likely to be unanticipated costs that come up at some point in your business’s existence. It’s important to factor these possible costs into your financial plans so you’re not caught totally unaware.

Business plans are important for businesses of all sizes so that you can define where your business is and where you want it to go. Growing your business requires a vision, and giving yourself a roadmap in the form of a business plan will set you up for success.

How do I write a simple business plan?

When you’re working on a business plan, make sure you have as much information as possible so that you can simplify it to the most relevant information. A simple business plan still needs all of the parts included in this article, but you can be very clear and direct.

What are some common mistakes in a business plan?

The most common mistakes in a business plan are common writing issues like grammar errors or misspellings. It’s important to be clear in your sentence structure and proofread your business plan before sending it to any investors or partners.

What basic items should be included in a business plan?

When writing out a business plan, you want to make sure that you cover everything related to your concept for the business,  an analysis of the industry―including potential customers and an overview of the market for your goods or services―how you plan to execute your vision for the business, how you plan to grow the business if it becomes successful and all financial data around the business, including current cash on hand, potential investors and budget plans for the next few years.

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Julia is a writer in New York and started covering tech and business during the pandemic. She also covers books and the publishing industry.

Kelly Main is a Marketing Editor and Writer specializing in digital marketing, online advertising and web design and development. Before joining the team, she was a Content Producer at Fit Small Business where she served as an editor and strategist covering small business marketing content. She is a former Google Tech Entrepreneur and she holds an MSc in International Marketing from Edinburgh Napier University. Additionally, she is a Columnist at Inc. Magazine.

Position a legal system startup

1. developing the idea for a legal system startup, 2. researching the need for your proposed startup, 3. putting together a business plan for your legal system startup, 4. securing financing for your legal system startup, 5. hiring employees and building a team for your startup, 6. launching and promoting your legal system startup, 7. managing operations and running your start up, 8. evaluating and adjusting your legal system startup's business plan, 9. growing and expanding your successful legal system startup.

The idea of a legal system startup is an ambitious one, but with the right team and the right plan, it can become a reality. To begin developing a legal system startup, the following steps should be taken:

1. identify Your Target market and Needs

Before you can begin to develop your legal system startup, you need to understand who your target market is and what their needs are. Researching the legal industry can help you determine what services may be needed by your clients. For example, if you are targeting small businesses , you may want to consider providing legal advice and support for various business decisions .

2. Research the Legal System

Once you have identified your target market and needs, you need to begin researching the legal system in order to understand how you can best provide your services. You will need to have an understanding of the different types of laws that may affect your clients and how they can be navigated. Additionally, you may need to research local, state, and federal laws that may affect your clients or their businesses.

3. develop a Business plan

creating a business plan is essential for any startup venture. A business plan should detail how you intend to run your legal system startup. It should include information on the services you plan to provide, pricing models, staffing needs, marketing strategies, and financing options. Additionally, it should include financial projections for at least three years into the future.

4. Secure Financing

Once you have developed a business plan, its time to start securing financing for your legal system startup. You may need to seek out venture capital or other sources of funding in order to get your business off the ground. Additionally, you may need to explore grants or other forms of financial assistance from government agencies or other organizations that support startups in the legal industry.

5. Assemble Your Team

Assembling the right team will play a crucial role in the success of your legal system startup. You will need experienced professionals with expertise in various areas such as law, finance, marketing, and technology. Additionally, you will need people who are willing to take risks and think outside of the box in order to create innovative solutions for your clients.

6. Develop Your Technology Platforms

Developing effective technology platforms is essential for any legal system startup. Your technology platforms should enable your clients to access services quickly and easily while also maintaining a secure environment in which data can be securely stored and accessed. Additionally, your technology platforms should be scalable so they can keep up with demand as your business grows.

7. Test Your Solutions

Before launching your legal system startup, its important to thoroughly test all of your solutions to ensure they are functioning properly and meeting the needs of your clients. This includes conducting user tests and collecting feedback from potential customers in order to identify any areas for improvement or areas that require further refinement before launch.

Developing a legal system startup requires dedication and hard work but with the right plan and team in place it can become a reality. By identifying your target market and needs, researching the legal system, creating a business plan, securing financing, assembling a team of experienced professionals, developing technology platforms, and testing all solutions before launch you can ensure that your legal system startup has everything it needs for success !

Developing the Idea for a Legal System Startup - Position a legal system startup

Researching the Need for Your Proposed Legal System Startup

When it comes to launching any startup, research is key to success. Before launching a legal system startup, its important to conduct extensive research into the need for the proposed service. This will help entrepreneurs understand the potential market size and customer base they can target, as well as the competitors they may face.

In order to do this effectively, entrepreneurs should start by researching the current legal system landscape. This involves looking at existing legal systems, the types of services they offer, and what kind of customer base they target. Additionally, researching any customer feedback on these existing systems will provide insight into customer needs and expectations in the market .

The next step is to understand customer needs for a proposed legal system startup. This can be done through interviews with current customers of existing legal systems, surveys of potential customers, and focus groups with lawyers and other legal professionals. Such research will uncover areas of need that current legal systems are not meeting and will allow entrepreneurs to develop a service offering that fills those gaps.

Additionally, it is important to look at competitors who are already providing similar services. Understanding their offerings and pricing structure is essential in developing a competitive startup strategy. Knowing what competitors are doing right and wrong can help entrepreneurs identify opportunities to differentiate their business in the market .

When researching the need for a legal system startup, entrepreneurs should also consider potential revenue streams or sources of funding. For example, if a startup is targeting a consumer market, understanding how that market pays for services will help entrepreneurs determine how to price their product . Understanding potential sources of funding such as venture capital or angel investors can also help entrepreneurs develop a long-term strategy for financing their business.

Ultimately, conducting thorough research before launching a legal system startup is essential for success in this competitive market . Doing so allows entrepreneurs to understand customer needs and develop an offering that meets those needs, as well as identify potential sources of revenue funding for their business. With this information in hand, entrepreneurs can craft a solid business plan that will give them the best chance at success.

Creating a business plan for your legal system startup is essential to ensure you are successful in launching a profitable venture. A well-executed business plan can help you secure financing , attract investors, and set yourself up for success.

The first step to putting together a business plan for your legal system startup is to conduct market research. This involves researching the legal market, understanding the needs of potential customers, and identifying the competition. You will need to determine the size of the market and what types of services your competitors offer. This information will help you identify opportunities to differentiate your legal system startup from others.

After conducting market research , you should create a business model. A business model outlines the structure of your company and how it will generate revenue. It should include information about your product or service offerings, pricing models, and target markets. Additionally, it should include an overview of the competitive landscape, identifying key competitors and their strengths and weaknesses .

Next, you should develop a marketing strategy . This involves creating a brand identity and positioning it in the market, as well as developing an integrated marketing plan that outlines how you will reach potential customers . You should identify the channels you will use to promote your services, such as online advertising, search engine optimization (SEO) campaigns, or content marketing.

The final step in creating a business plan for your legal system startup is to establish a financial plan. This includes setting up a budget for expenses such as salaries, overhead costs, and marketing campaigns. Additionally, you should create financial projections that show your expected revenue and cash flow over time. This will help you identify potential risks and develop strategies for mitigating them.

Creating a business plan for your legal system startup can seem daunting at first. However, with careful planning and research, you can set yourself up for success by creating a comprehensive document that outlines your goals and strategies for achieving them. Doing so will help you secure financing, attract investors, and launch a profitable venture that meets customer needs.

Securing financing for your legal system startup can be a daunting task. It is important to understand the different types of financing available and how they can be used to fund your venture.

The most common form of financing for legal start-ups is debt financing. This involves borrowing money from a lender, such as a bank, in exchange for a loan agreement that outlines the repayment terms, interest rate, and other requirements. Debt financing can be used to cover startup costs such as office space, equipment, and legal services. It can also be used to finance ongoing operations and growth.

Venture capital is another form of financing that is often used by legal system startups. In this case, an investor provides money in exchange for an equity stake in the company. Venture capital is typically used to fund high-risk projects and can provide the startup with the resources it needs to launch or expand its operations.

Angel investors are another potential source of funds for legal system startups. These individuals typically have experience in launching or managing similar businesses and use their own funds to provide seed money or bridge funding to help the startup succeed . Angel investors may also offer mentorship and guidance, which can be invaluable in helping the startup reach its long-term goals .

The final form of financing available to legal system startups is crowdfunding. Through platforms like Kickstarter or indiegogo , entrepreneurs can solicit funding from friends, family members, and the general public. The benefit of crowdfunding is that it gives entrepreneurs access to capital without having to give up equity or incur debt.

Securing financing for your legal system startup will require a well-crafted plan and diligent research into available sources of funds. It is important to understand each type of financing available and how it can be used to achieve your desired outcome . Once you have identified the best option for your venture, you will need to create a detailed plan that outlines how you will use the funds and how you will repay any debt you incur. Additionally, you should consider seeking advice from experienced entrepreneurs or financial advisors when creating your financing plan. With the right strategy in place, you can secure the resources needed to make your legal system startup a success.

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building a successful team is one of the most important components of any successful business , especially for startups. Hiring the right employees can make or break a small business , as employee performance and attitudes directly affect the customer experience and ultimately, the success of the venture. It is important to consider the following key points when hiring employees and building a team for your startup :

1. Define Your Needs: Before beginning the hiring process, it is important to take the time to define your needs. What skills are needed for your startup to be successful? What type of culture do you want to create? What kind of experience do you need from potential employees? Taking the time to really think through these questions will help you create a clear job description and attract the right talent.

2. Create an Attractive Job Description: Once you have determined your needs, it is essential to create an attractive job description that will draw in qualified applicants. It should include details about the position, expectations, qualifications, and perks. Be sure to use language that is clear and concise so that potential applicants understand what they will be expected to do and what they can expect in return.

3. Network: Once you have created a job description, it is important to network to find potential employees. This can be done through social media sites such as LinkedIn, by attending networking events in your industry, or by reaching out to contacts who may know someone who would be a good fit for the position.

4. Interview Candidates: Once you have attracted potential applicants, it is important to interview them in order to assess their qualifications and fit for your startup team. During interviews, it is important to ask questions that are relevant to the position and that allow you to get a better understanding of the applicants skills and experience.

5. Onboard Employees: Once you have hired employees, it is important to provide proper onboarding so that they can quickly get up to speed with their tasks and responsibilities. This should include providing training materials, setting expectations, and introducing them to other members of the team.

By following these steps when hiring employees and building a team for your startup, you will be able to attract qualified applicants and create an effective team that will help your business succeed. It is essential to take the time during each step of the process in order to ensure that you are selecting individuals who will add value to your business and contribute positively to its goals. Building a successful team takes time and effort but will ultimately pay off in the long run.

Hiring Employees and Building a Team for Your Startup - Position a legal system startup

Launching and Promoting Your Legal System Startup

starting a legal system startup can be a daunting task, but it can be immensely rewarding. From market research to product development to customer acquisition, there are a lot of moving parts that need to be in place before launch. With the right plan and strategy, however, launching and promoting your legal system startup can be a successful endeavor.

The first step to launching and promoting your legal system startup is to conduct market research . This is essential in order to determine the needs of customers, the competitive landscape, and any other relevant information that will give you an edge in the market. This should include understanding the legal technology landscape, researching potential competitors, and gathering customer feedback .

Once you have identified your target market, you can begin to develop your product. Consider hiring a software development team if needed to create a user-friendly platform that meets the needs of your customers. Test the product with users prior to launch to ensure it meets their expectations.

The next step is to create an effective marketing strategy . This should include developing a website with relevant content, setting up social media accounts, creating a blog, and launching an email marketing campaign . Advertise on relevant platforms and consider using influencer marketing campaigns or pay-per-click advertising to get the word out about your startup. Additionally, consider attending industry events and networking with potential customers.

Once you have launched your legal system startup, it is important to track customer feedback and analytics in order to understand what is working and what isnt. This will help you make necessary changes and improvements to your product as well as develop more effective marketing strategies. Additionally, it is important to stay abreast of industry trends in order to remain competitive.

Finally, don't forget about customer service. providing excellent customer service is essential for retaining existing customers as well as attracting new customers. Respond promptly to customer inquiries and feedback and provide helpful resources on your website or blog. Also consider offering free trials or discounts for new customers.

Launching and promoting your legal system startup can be a challenging but rewarding experience . With proper planning, research, development, marketing, and customer service strategies in place, you can create a successful legal system startup that meets the needs of customers while competing in a crowded marketplace.

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Running a legal system startup is no walk in the park. It requires a great deal of planning, strategy, and hard work to make sure you stay on top of all the details that come with managing a business. But if you have the right skills and attitude, your startup can be a success.

The key to success for any legal system startup is to manage operations effectively. This means understanding the full scope of your operations and how different elements interact with each other. It also means having a plan for how you will handle issues as they arise, from customer service to staff training to financial management .

One of the most important aspects of managing operations for a legal system startup is developing a system for workflow. This means mapping out the process for how information and tasks move through your organization, from initial contact with customers to closing a deal . Having a clear understanding of your workflow will give you insight into where bottlenecks may exist and allow you to make changes as needed.

Another important aspect of managing operations for a legal system startup is maintaining proper documentation. Documentation can include contracts, legal agreements, customer agreements, and any other documents that are necessary to run your business. Its important to keep these documents up to date and store them in an accessible location sothey are easy to find when needed.

When it comes to running your legal system startup, its important to have a team that is well trained and experienced in the industry. You should also ensure that your team has access to the resources they need to do their jobs well. This includes providing them with the latest software and technology, as well as making sure they have access to industry-specific training opportunities. Additionally, its important to provide them with clear direction and support so they can succeed in their roles.

Finally, financial management is an important part of running a legal system startup. You should take the time to review your finances regularly and create reports that give you an overview of where your money is going and why its being spent. This will help you identify areas where you can save money or make improvements to increase profitability. Additionally, these reports can help you make decisions about which areas of your business need additional investment or resources in order to reach your goals.

Overall, managing operations and running a legal system startup requires a great deal of planning and strategy. By keeping these tips in mind, you can ensure your business runs smoothly and efficiently while helping you reach your goals.

Starting a legal system startup can be a daunting and complex task. You may have a great idea, but without a business plan, you won't be able to evaluate and adjust your business in order to make it successful. A business plan is essential for any startup, and that's especially true for legal system startups.

Before you begin, its important to understand what a business plan is and why its so important . A business plan is a written document that outlines the goals of your company, how you will achieve them, and the strategies and tactics you'll use to do so. It should also include financial projections and other important information about your legal system startup.

Once you have a business plan in place , its time to evaluate and adjust it. evaluating your business plan will help you determine if your goals are realistic and achievable. It can also help you identify potential problems or opportunities that you may not have considered when you originally developed the plan.

When evaluating your business plan, consider the following:

Is the plan realistic? Are the goals achievable within the timeframe set out in the plan?

Are there any potential risks or obstacles that could prevent you from achieving your goals?

Does the plan provide enough detail to move forward with implementation?

Is the plan flexible enough to accommodate changes in the market or technology?

Is the plan comprehensive enough to cover all areas of your legal system startup?

Once you've finished evaluating your business plan, its time to adjust it if needed. Adjustments should include changes to goals, strategies, tactics, and financial projections in order to make sure they remain realistic and achievable. Your legal system startup should constantly be evolving as you gain more experience and knowledge. Don't be afraid to make adjustments as needed in order to make sure your business is on track for success.

adjusting your business plan is an ongoing process that should be completed on a regular basis. Its important to review your plan at least once per quarter or whenever major changes occur in the market or technology. This will help ensure that your legal system startup remains on track for success.

Evaluating and adjusting your business plan will help ensure that your legal system startup is successful in the long run. Taking the time to review and adjust your business plan on a regular basis can save you from costly mistakes down the road. With a solid plan in place, you can feel confident knowing that your legal system startup has what it takes to succeed .

Successful legal system startups are a powerful tool for entrepreneurs and small businesses. They provide the framework for building a successful business, and make it easier to navigate the complexities of the legal system. By growing and expanding your successful legal system startup, you can increase your profitability and open up new opportunities for your business.

The first step in growing and expanding your legal system startup is to understand your market and what drives it. What types of clients do you serve? Are there any new trends or changes that you need to be aware of? Doing market research helps you to identify potential opportunities for growth, as well as identify potential problems that could impede your growth.

Next, create a business plan for your legal system startup that outlines how you will expand your business. Your business plan should include strategies for marketing, financing, customer service, operations, and legal services. It should also include a timeline of when each step needs to be completed. This will help you stay focused on achieving your goals in a timely manner.

Once you have a plan in place, you should then focus on developing relationships with other businesses in the same industry as yours. Establishing partnerships with other legal professionals can help you offer a wider variety of services and increase your customer base. Additionally, connecting with other businesses can help you stay up-to-date on industry trends and provide valuable insights into how to improve your services.

Additionally, consider investing in technology that can help streamline processes and make your business more efficient. Investing in software and systems that can automate processes such as document management, billing, and customer service can make it easier to manage your business and free up time for more important tasks. By embracing new technologies, you can maximize efficiency and reduce costs associated with manual labor.

Finally, consider pursuing additional certifications or qualifications that can help you gain credibility in the eyes of potential clients or partners. Earning certifications like being a Certified Legal System Professional (CPLP) or being licensed to practice law in multiple states can help you stand out from the competition and attract more customers or partners.

By taking the time to proactively grow and expand your legal system startup, you can open up new opportunities for success. Understanding your market, creating a comprehensive business plan , developing relationships with other businesses in the industry, investing in technology, and investing in additional certifications are all important steps towards achieving success with your legal system startup. With a little effort and dedication, you'll be well on your way to taking your business to the next level .

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1 Introduction to Law and Types of Legal Systems

1.1 introduction to law and types of legal systems, learning objectives.

• Understand the nature and sources of law.
• Know the types of modern legal systems in the world.
• Understand the various functions of a legal system.
• Learn the primary sources of law in the United States.

It is important for business people to understand the legal environment in which they are operating. To be successful, businesses must understand how law and economic principles influence each other. Businesses want to be successful, which usually means they want to be profitable. While a basic economic principle is that businesses act in their own self-interest, they must do so within the parameters of the law. Sometimes businesses weigh the penalties of violating the law against the chances of getting caught to determine how they should behave. In both instances, the law is a restraint on behavior.

Most people want to conduct their business legally. Following the rules saves money, time, and frustration, and it preserves individual and professional reputations. So, if businesses have an incentive to operate legally, why are do so many legal disputes occur? There are many reasons for this, including that many of our laws are poorly written, and reasonable people may disagree about what is “right.” Legal injuries happen even under the best of circumstances, and parties need a method to be compensated for their damages.

A common theme in the study of law is responsibility. Law seeks to answer the questions:

• Who is responsible, and what is their liability? and
• How does a business limit exposure to liability in the first place?

A solid understanding of business law minimizes the risk of liability and avoids legal disputes. The law provides a reasonable expectation of how things will be in the future based on how they have been in the past. It provides predictability and stability.

This book does not teach how to practice law or conduct legal research. The goals of this book are practical. Think about studying business law as a map by which to navigate business dealings. We want to help you minimize the risk of legal liability and avoid serious legal disputes. This book serves as an introduction to legal topics that affect businesses. By understanding the legal landscape, you will have a better opportunity for business success.

1.2 What Is Law and What Functions Does It Serve?

Law is the system of rules which a particular nation or community recognizes as regulating the actions of its members and which it may enforce by the imposition of penalties. In a nation, the law can serve to (1) keep the peace, (2) maintain the status quo, (3) preserve individual rights, (4) protect minorities, (5) promote social justice, and (6) provide for orderly social change. Some legal systems serve these purposes better than others.

Although a nation ruled by an authoritarian government may keep the peace and maintain the status quo, it may also oppress minorities or political opponents (e.g., China, Zimbabwe, or Syria). Under colonialism, European nations often imposed peace in nations whose borders were created by those same European nations. With regard to the functions of the law, the empires may have kept the peace—largely with force—but they changed the status quo and seldom promoted the native peoples’ rights or social justice.

In nations with various ethnic and tribal groups, it is often difficult for a single, united government to rule effectively. In Rwanda, for example, power struggles between Hutus and Tutsis resulted in the genocide of the Tutsi minority. In nations of the former Soviet Union, the withdrawal of a central power created power vacuums that were exploited by local leaders. When Yugoslavia broke up, the different ethnic groups—Croats, Bosniaks, and Serbs—fought bitterly rather than share power. In Iraq and Afghanistan, the blending of different groups of families, tribes, sects, and ethnic groups into an effective national governing body continues to be a challenge.

These situations highlight the struggle of a nation to implement and maintain the Rule of Law. The Rule of Law is a system in which laws are public knowledge, are clear in meaning, and apply equally to everyone. These systems uphold national political and civil liberties. Rule of law systems establish authority, create expectations for behavior, and establish redress for grievances and penalties for deviance. Governance of conflict and the attainment of peace among the governed are its primary goals. One of the greatest benefits of the Rule of Law is that it allows people to understand what is expected of them.

The United States is a Rule of Law System. The US Constitution is based on the principle that people have rights that cannot be taken away by the government. Instead, the role of the government is to protect the individual rights of its citizens. The US Constitution’s preamble states, “We the People…in Order to…insure domestic Tranquility.” This is just one example of how the US legal system was established to address the functions of a legal system.

1.3 Modern Legal Systems of the World

There are four main legal systems in the modern world:

• Common law;
• Religious law; and
• Customary law/monarchy.

As the world becomes more interdependent, a fifth category of legal systems has developed — the hybrid legal system, which is a legal system that is a combination of two or more legal systems.

Common Law Systems

The legal system in the United States comes from the English common law tradition and the US Constitution. English common law is a system that gives written judicial decisions the force of law. As a result, the US legal system recognizes an appellate court’s ability to interpret and apply the law to future litigants through precedent. Precedent is a judicial opinion that is considered legal authority for future cases involving the same or similar questions of law. The benefit of this system is consistency and resolution of disputes without requiring the parties to take legal matters to court.

A famous example of how precedent works is the US Supreme Court case  Brown v. Board of Education of Topeka.  In this landmark 1954 case, the Justices unanimously ruled that racial segregation of children in public schools is unconstitutional. Brown v. Board of Education is one of the cornerstones of the Civil Rights Movement and helped establish the precedent that “separate-but-equal” education and other services were not, in fact, equal at all. The case required all racially segregated public schools to integrate, not just in Topeka, Kansas. In addition,  Brown has been cited as legal precedent in thousands of cases nationwide involving racial equality.

The common law legal system is adversarial. This means that the parties bring their cases to the court for resolution. The judge or jury hears the parties’ evidence and arguments before making a final decision. It is the parties’ burden to investigate the facts, argue the law, and present their best case. Judges and juries do not do independent investigations nor are they responsible for helping parties argue their cases. It is a party’s responsibility to raise all legal issues.

Another characteristic of common law systems is that cases are often decided by juries of the parties’ peers. In both civil and criminal matters, the parties usually have a right to have a jury pulled from local citizens to resolve the dispute. When a jury determines the outcome of a case, the judge acts as a “gatekeeper,” who decides what evidence and legal arguments the jury can properly consider. The judge ensures the parties receive a fair trial while the jury decides the outcome of the trial.

The common law tradition is unique to England, the United States, and former British colonies. Although there are differences among common law systems (e.g., whether judiciaries may declare legislative acts unconstitutional and how frequently juries may be used), all of them recognize the use of precedent, and none of them relies solely on the comprehensive, legislative codes that are prevalent in civil law systems.

Civil Law Systems

Civil law systems were developed in Europe and are based on Roman and Napoleonic law. Civil law systems are also called code systems because all the legal rules are in one or more comprehensive legislative enactments. During Napoleon’s reign, a comprehensive book of laws—a code—was developed for all of France. The code covered criminal law and procedure, non-criminal law and procedure, and commercial law. The code is used to resolve only cases brought to the courts, which are usually decided by judges without a jury.

Civil law systems are inquisitorial systems in which judges actively investigate cases. Judges have the authority to request documents and testimony, as well as to shape the parties’ legal claims. In addition, judges are not required to follow the decisions of other courts in similar cases. The law is in the code, not in the cases. The legislature, not the courts, is the primary place to enact and modify laws.

Civil law systems are used throughout Europe, Central and South America, Asia and Africa. France, Germany, Holland, Spain, and Portugal had colonies outside of Europe, and many of these colonies adopted the legal practices that were imposed on them by colonial rule.

There are also communist and socialist legal systems that differ significantly from traditional civil law systems. Legal scholars debate whether this is a separate type of legal system or a subset of modern civil law systems. In a communist or socialist legal system, the nation has a code but most property is owned by the government or agricultural cooperatives. In addition, the judiciary is subservient to the Communist party and is not an independent branch of government.

Religious Law Systems

Religious law systems arise from the sacred texts of religious traditions and usually apply to all aspects of life, including social and business relations. In religious legal systems, a religious document is used as a primary legal source. All major world religions–Judaism, Christianity, Islam, Buddhism and Hinduism–have a religious legal system. The Islamic legal system (Sharia) with Islamic jurisprudence (Fiqh) is the most widely used religious legal system in the world. Most nations that have religious legal systems use them to supplement their secular national system. Only Saudi Arabia (Islamic) and the Vatican (Christian) are pure theocracies that have only a religious legal system in their nations.

Customary Law Systems

Customary legal systems are becoming increasingly less common. A customary system is used by a monarchy and grants specific legal powers to the kings, queens, sultans or tribal leaders as heads of state. A challenge of a customary system is that the ruler is seen to be “above the law” because the laws do not apply equally to the ruler and subjects. There are only a handful of monarchies remaining in the world, and most of them have evolved into hybrid legal systems or have adopted a different type of legal system.

Hybrid Law Systems

Hybrid legal systems are a combination of two or more legal systems within a nation. India is a classic example of a nation with a hybrid legal system. As a former British colony, India has a common law legal system, which recognizes the power of the Supreme Court and High Courts to make binding judicial decisions as a form of precedent. However, most of its laws are integrated codes found in a Napoleonic code system. In addition, India has separate personal codes that apply to Muslims, Christians, and Hindus. As a result, India has a hybrid system made up of common law, civil law and religious law systems.

Figure 1.1 Legal Systems of the World Map

1.4 Sources of Law

Where does law come from? How do individuals and businesses know right from wrong? Not all actions that are considered “wrong” or inappropriate are violations of the law. They simply may represent social norms. So what is the difference? There are two types of rules in our society—social norms and laws.

Social norms are the informal rules that govern behavior in groups and societies. Social norms and cultural expectations may be violated with negative social or professional consequences for doing so. However, no legal repercussions follow violating social norms alone.

Violations of law are different. Violating the law carries penalties, such as civil liability, fines, or loss of liberty. While it is optional to conform to social customs, people are compelled to obey the law under threat of penalty.

Laws are generally classified as public law or private law. Public law applies to everyone. It is law that has been created by a legitimate authority with the power to create law, and it applies to the people within its jurisdiction. In the United States, the lawmaking authority itself is also subject to those laws, because no one is “above” the law. If the law is violated, penalties may be levied against violators. Examples of public law include constitutions, criminal laws, and administrative laws. For example, if someone steals items from a store, the thief is violating public law. He committed the crime of theft which affects the community as a whole (not just the store owners), and the crime is defined in public legislation.

Private law is law that is binding on specific parties. For instance, parties to a contract are involved in a private law agreement. The terms of the contract apply to the parties of the contract but not anyone else. If the parties have a contract dispute, the terms of the contract and the remedy for breach will apply only to the parties of the contract. In addition to contracts, other examples of private law include tort and property laws. For example, if someone installs an industrial smoker on his property and the smoke creates a dense haze in the neighbor’s yard, there may be a violation of private law because the smoke is interfering with the neighbor’s right to peacefully enjoy one’s property.

Laws are also classified as civil or criminal. Civil law is usually brought by a private party against another private party. For example, one company decides to sue another for breach of contract. Or a customer sues a business when injured by the company’s product. Most laws affecting businesses are civil.

Criminal law involves a governmental decision to prosecute someone for violating a criminal statute. If someone breaks a criminal law, he or she could lose their freedom (i.e. be sent to prison) or lose their life (i.e. if convicted of a capital offense). In a civil action, no one is sent to prison. Usually, liability results in the loss of property such as money or assets.

Additionally, some law is procedural and some law is substantive. Procedural law describes the legal process and rules that are required and must be followed. For instance, parties who are sued in court must receive notice of the lawsuit before the court can impose judgment against them. Substantive law refers to the actual substance of the law or the merits of the claim, case, or action. Substantive law embodies the ideas of legal rights and duties and is captured by different sources of law, including the Constitution, statutes, and common law.

For example, if someone drives fifty-five miles per hour in a forty mile-per-hour zone, she has broken the substantive rule of law of the speed limit. However, how and what gets decided in court related to the speeding ticket is a matter of procedural law. For example, whether the driver is entitled to a hearing before a judge, whether she has a right to be represented by legal counsel, whether the hearing takes place within a certain amount of time after the ticket was issued, and what type of evidence can be presented are procedural law issues.

Sources of Law

In the United States, our laws come primarily from:

• Federal and state constitutions;
• Statutory law from Congress, the state legislatures, and local legislative bodies;
• Common law from federal and state appellate courts;
• Administrative rules and regulations;
• Treaties and conventions; and
• Executive orders.

Constitutions

The most fundamental law in the United States is the US Constitution, which is the supreme law of the nation. Any law that conflicts with it is void. The Constitution serves three important functions. First, it establishes the structure of our national government and identifies the powers of the legislative, executive, and judicial branches. Second, it defines the boundaries of each branch’s authority and creates “checks” on each branch by the other branches. For example, the president is the commander-in-chief of the armed forces, but does not have the power to declare war. That duty falls to Congress. And, third, the Constitution guarantees civil liberties and individual rights.

The power granted to the federal government by the Constitution is limited. Any powers not expressly granted to the federal government by the Constitution are reserved to the states. This means that if the Constitution does not give the federal government power over a particular area, then the states regulate it.

The first ten amendments to the Constitution are known as the Bill of Rights . Despite the limited power granted to the federal government by the Constitution, the Bill of Rights protects certain individual civil rights and liberties from governmental interference. These rights include the freedom of speech and religion, the right to bear arms, and the rights of individuals who are suspected and accused of crimes.

Figure 1.2 Separation of Powers of the Federal Government

Each state also has its own constitution, which serves essentially the same function for the state government as the US Constitution serves for the federal government. Specifically, they establish limits of state government power, establish the organization and duties of the different branches of government at the state level, and protect fundamental rights of state citizens. This dual system of government in the United States is called federalism , which is a governance structure whereby the federal government and the state governments coexist through a shared power scheme.

Figure 1.3 Separation of Powers of the State Governments

Statutes are laws created by a legislative body. Congress is the federal legislative body, and each state also has its own legislative body. Almost all statutes are created by the same method. An idea for a new law is proposed in the legislature. This proposal is called a bill . The House of Representatives and Senate independently vote on a bill. If the majority of both chambers approves it, the bill is sent to the president or governor for approval. If the president or governor signs the bill, then it becomes a statute.

Local governments, such as counties, cities, and townships, may be authorized under a state constitution to create or adopt ordinances. An  ordinance  is a legislative act of a local government entity. Examples of ordinances include building codes, zoning laws, and misdemeanors such as jaywalking.

Binding legal principles also come from the courts. When appellate courts decide a case, they may interpret and apply legal principles in a way that are binding on lower courts in the future. The process of applying a prior appellate decision to a case is called precedent . Simply put, precedent is when judges use past decisions to guide them. The benefit of precedent is that it makes the law predictable and furthers the rule of law by applying legal principles to the greater community, not just the parties to a lawsuit. Businesses value common law systems because they reduce the cost of business. For example, if a business is unsure of how its contract rights will be applied by the court, it can understand its rights by learning how courts interpreted similar contract provisions in past lawsuits. This allows businesses to assess their risks, determine their liability, and make rational business decisions without the expense of litigation.

Administrative Rules and Regulations

Administrative law is the collection of rules and decisions made by agencies to fill in particular details missing from constitutions and statutes. For example, the Internal Revenue Service (IRS) is the federal agency responsible for collecting national taxes and administering the Internal Revenue Code enacted by Congress. All businesses and individuals must follow the IRS rules and regulations about how to report, file, and pay applicable taxes that Congress levies. Congress passes statute defining “what” taxes need to be paid. The IRS adopts the rules about “how” those taxes are paid.

In the United States, many of the day-to-day regulation of businesses is done by administrative agencies. These agencies are created by the legislature to implement and enforce a particular statute. Agencies often report to the executive branch, but some are run by independent commissions. Legislative bodies give agencies the power to create rules and regulations that individuals and businesses must follow to comply with the statute. For example, the Environmental Protection Agency (EPA) was created to implement and enforce the Clean Air Act and the Clean Water Act.

Treaties and Conventions

A treaty is a binding agreement between two nations. A convention is a binding agreement among a group of nations. In the US, a treaty or convention is generally negotiated by the executive branch. To be binding, the US Constitution requires the Senate to ratify treaties by a two-thirds vote. Once ratified, a treaty becomes part of federal law with the same weight and effect as a statute passed by the entire Congress. Therefore, treaties and conventions have equal standing as statutes in US law.

Executive Orders

Article II, Section 1 of the US Constitution gives the president the power to “take care that the laws be faithfully executed.” Under this power, the president may issue  executive orders requiring officials in the executive branch to perform their duties in a particular manner. State governors have the same authority under state constitutions. Although they are not laws that apply directly to individuals and businesses, executive orders are important legal documents because they direct the government’s enforcement efforts.

Hierarchy of Sources of Law

1.5 Concluding Thoughts

Understanding business law is essential to successfully running any type of business because a solid understanding of laws and regulations helps avoid liability and minimizes risk. In business, it is not enough to conduct business ethically. Knowledge of business law is essential to successful business practices. Ultimately, business people should be able to recognize legal issues, minimize liability exposure, and know when to consult an attorney.

Legal systems vary widely in their aims and in the way they resolve disputes. Common law systems are adversarial, use juries and adhere to precedent. Civil law systems are inquisatorial, do not use juries and do not recognize precedent. All major world religions have a legal system, although only two nations have a purely national religious system. Many nations have hybrid legal systems that combine two or more legal systems.

The legal system in the United States is composed of multiple jurisdictions at the local, state and federal levels. Local and state laws may not conflict with federal laws. Primary sources of law in the United States include constitutional law, statutory law, common law, administrative law, treaties, and executive orders.

Introduction to Law and Types of Legal Systems Copyright © 2020 by Melissa Randall is licensed under a Creative Commons Attribution-NonCommercial-ShareAlike 4.0 International License , except where otherwise noted.

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1.3 Important Business Laws and Regulations

Business law is a very expansive area of the law. It primarily addresses issues related to the creation of new businesses, which arise as existing companies deal with the public, government, and other companies. Business law consists of many legal disciplines, including contracts, tax law, corporate law, intellectual property, real estate, sales, immigration law, employment law, bankruptcy, and others.

As noted, business law touches upon a number of other legal areas, practices, and concerns. Some of the most important of these, which are discussed in this section, are disputes and dispute settlement, business ethics and social responsibility, business and the United States Constitution, criminal liability, torts, contracts, labor and employment law, Unfair Trade Practices and the Federal Trade Commission, international law, and securities regulation. Though they are discussed in much more depth in later chapters, the following gives a brief overview.

Disputes and Dispute Settlement

In addition to the federal court and individual state systems, there are also a variety of mechanisms that companies can use to resolve disputes. They are collectively called alternative dispute resolution (“ADR”), and they include mediation, settlement, and arbitration. Many states now require companies to resolve legal disputes using ADR before the initiation of any lawsuit to encourage speedy resolution, cost and time containment, and reduced judicial dockets. Traditional litigation remains an option in most cases if other efforts fail or are refused.

Business Ethics and Social Responsibility

In the routine course of business, employees are often required to make decisions. Business ethics outline the ethical model, or framework, that companies expect employees to follow when making these decisions, as well as the behavior that the companies deem acceptable. Sound and ethical decision making can also help companies avoid legal liability and exposure. Typically, an ethics code and/or a code of conduct details a company’s requirements and guidelines, while also serving as a key corporate governance tool.

In addition to business ethics, companies must also consider their social responsibility and the laws related to it, such as consumer and investor protections, environmental ethics, marketing ethics, and ethical issues in financial management.

Business and the United States Constitution

Since the start of the 20th century, broad interpretations of the Constitution’s Commerce and Spending Clauses have expanded the reach of federal law into many areas. Indeed, its reach in some areas is now so broad that it preempts virtually all state law. Thus, the Constitution’s Commerce Clause has been interpreted to allow federal lawmaking and enforcement that applies to many aspects of business activity. Additionally, the Constitution’s Bill of Rights extends some protections to business entities that are also constitutionally guaranteed to individuals

For example, on January 21, 2010, in Citizens United v. Federal Election Commission , 558 U.S. 310 (2010), the U.S. Supreme Court heard the issue of whether the government can ban political spending by corporations in candidate elections. The Court ruled that corporations have the same Constitutional right to free speech as individuals, and thus lifted the restrictions on contributions.

Criminal Liability

The imposition of criminal liability is one method used to regulate companies. The extent of corporate liability found in an offensive act determines whether a company will be held liable for the acts and omissions of its employees. Criminal consequences may include penalties, such as prison, fines and/or community service. In addition to criminal liability, civil law remedies are usually available, e.g., the award of damages and injunctions, which may include penalties. Most jurisdictions apply both criminal and civil systems.

Within the business law context, torts may involve either intentional torts or negligence. Additionally, companies involved in certain industries should consider the risk of product liability. Product liability involves a legal action against a company by a consumer for a defective product that caused loss or harm to the customer. There are several theories regarding recovery under product liability. These include contract theories that deal with the product warranty, which details the promises of the nature of the product sold to customers. The contract product warranty theories are Express Warranty, Implied Warranty of Merchantability, and Implied Warranty of Fitness. Tort theories deal with a consumer claim that the company was negligent, and therefore caused either bodily harm, emotional harm, or monetary loss to the plaintiff. The tort liability theories that can be used in this context are negligence (failure to take proper care in something), strict liability (imposition of liability without a finding of fault), and acts committed under Restatement (Third) of Torts (basic elements of the tort action for liability for accidental personal injury and property damage, as well as liability for emotional harm).

The main function of a contract is to document promises that are enforceable by law. The key to an agreement or contract is that there must be an offer and acceptance of the terms of that offer. Sales contracts normally involve the sale of goods and include price terms, quantity and cost, how the terms of the contract will be performed, and method of delivery.

Employment and Labor Law

Employment and labor law is a very broad discipline that covers a broad array of laws and regulations involving employer/employee rights and responsibilities in the workplace. This law includes worker protection and safety laws, such as OSHA, and worker immigration laws, such as the Immigration Reform and Control Act, which imposes sanctions on employers for knowingly hiring illegal immigrants. Other notable areas of employment and labor law include, but are not limited to, the National Labor Relations Act, which deals with union and management relations, as well as Equal Opportunity in Employment laws, which provide workers with protections against discrimination in the workplace, e.g., Title VII, the Americans with Disabilities Act, Age Discrimination in Employment Act, and others.

Antitrust Law

Antitrust legislation includes both federal and state laws regulating companies’ conduct and organization. The purpose of such regulation is to allow consumers to benefit from the promotion of fair competition. The main statutes implicated by antitrust law are the Sherman Act of 1890, the Clayton Act of 1914, and the Federal Trade Commission Act of 1914. These Acts discourage the restraint of trade by prohibiting the creation of cartels and other collusive practices. Additionally, they encourage competition by restricting the mergers and acquisitions of certain organizations. Finally, they prohibit the creation and abuse of monopoly power.

Actions may be brought in courts to enforce antitrust laws by the Federal Trade Commission (“FTC”), the U.S. Department of Justice, state governments, and private parties.

Unfair Trade Practices and the Federal Trade Commission

The term “unfair trade practices” is broadly used and refers to any deceptive or fraudulent business practice or act that causes injury to a consumer. Some examples include, but are not limited to, false representations of a good or service including deceptive pricing, non-compliance with manufacturing standards, and false advertising. The FTC investigates allegations of unfair trade practices raised by consumers and businesses, pre-merger notification filings, congressional inquiries, or reports in the media and may seek voluntary compliance by offending businesses through a consent order, administrative complaints, or federal litigation.

Securities Regulation

Securities regulation involves both federal and state regulation of securities and stocks by governmental regulatory agencies. At times, it may also involve the regulations of exchanges like the New York Stock Exchange, as well as the rules of self-regulatory organizations like the Financial Industry Regulatory Authority (FINRA).

The Securities and Exchange Commission (SEC) regulates securities on the federal level. Other instruments related to securities, such as futures and some derivatives, are regulated by the Commodity Futures Trading Commission (CFTC).

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The Legal Requirements to Start a Small Business in the UK Explained

Holly Andrews

17 min. read

Updated October 27, 2023

Starting a new business  is a busy time for an entrepreneur. You’re developing a  business plan , getting your  financial plan  in order, and possibly  pitching  to investors or seeking  funding . One thing that can be overlooked but is incredibly vital, is ensuring all legal obligations are met. The failure to do so can result in fines or possibly even court proceedings.

This guide should help you tackle the legal aspects of starting a business in the UK, from choosing a name for your business right at the start all the way to employing staff later on. You can work the relevant legal points into your traditional business plan, or even draw up a separate legal plan or checklist to ensure you have covered everything. 

While the legal processes covered are specific to the UK, the general categories are likely applicable no matter where your business located. That being said, let’s dive in.

• Naming your business

You need to choose a  unique name  for your business, that is not being used already, to avoid running

into problems. If the name is too similar to other businesses, it can suggest there is a connection between the companies and you could be seen as trying to pass your company off as theirs, taking business from them as a result. If they complain or file for trademark infringement, you could be required to change your business name, possibly pay damages, and spend extra time and money re-doing signs, stationery, advertising, etc.

You can easily check to see if your name idea has been taken yet using  Made Simple  and it’s also wise to verify if a  similar trademark already exists .

• Choosing the legal status of your business

The legal status you choose determines whether you need to register your business with  Companies House , which is the UK’s registrar of companies. The legal status also affects the records and accounts that you have to keep, the amount of tax and National Insurance (NI) you will pay, and your financial liability if the business were to go under. 

It’s also worth noting that in the UK employees pay NI contributions to qualify for certain state benefits and a state pension when they retire. This total will vary based on the legal status of your business. Here are the most common types of legal business structures to choose from when setting up a new business.

Sole trader 

This is the easiest option if you are the only owner (you can still employ people). There is no business registration with Companies House required and keeping records and accounts is simple. Many businesses start off as sole traders and change their legal status later on.

You can benefit from full profit retention and you can complete your own self-assessment tax return online each year, or get an accountant to do it for you. There will be more about paying taxes in the next section. 

If you want to protect the name of your business, you will still need a trademark as no formal registration happens. You will need to weigh up the cost of this to see if it is worth doing.

The downside of being a sole trader is that you have unlimited liability, meaning you are liable for any debts the business has. You could risk your own personal assets, such as your house and savings if the business got into financial difficulty. Sole traders also find it harder to get the funding they need from banks, but it could be the right option for you if your business is low-risk and does not need finance. 

Some people prefer to deal with sole traders over limited companies as the business tends to feel more personal, particularly if the nature of the work is sensitive.

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Partnership 

This is the easiest option when there is more than one business owner, and two or more people share the costs, risks, and responsibilities. You do not have to have equal shares and each person’s liability is proportionate to their share.

The downside is that like being a sole trader, partners are not protected financially. If the business goes under you could become liable for your partner’s share of the debt. To avoid this scenario, you can become a Limited Liability Partnership (LLP) so that the LLP is then responsible for any debt and not the business owners.

Limited company 

Most limited companies in the UK are limited by shares. Setting the business up as a limited company means it is a separate legal entity that protects you financially, as the company finances are separate from your own personal finances.

It is more complicated than becoming a sole trader as you need to register the business with Companies House, submit accounts and annual returns to them, and adhere to their  record-keeping  requirements.

There can be financial advantages in terms of paying tax by becoming a limited company, and it can also be easier to obtain financing. It is best to discuss these specific benefits with an accountant before registering your business.

• Paying tax and National Insurance

All businesses must be registered with  HM Revenue and Customs  (HMRC) as soon as you start trading so that you can pay income tax on your profit and Class 2 and 4 national insurance (NI).

This can be done  online  and the HMRC will set up an account for you to do your self-assessment. Once complete, they will contact you with a ten-digit Unique Taxpayer Reference (UTR) and send a letter in 2-3 weeks giving you an activation code to access the account.

In order to complete your self-assessment properly, you will need to keep records of your business sales and expenses. To help me stay organized, I have a separate business account that I use to buy the things I need for business operations.

Accepting payment by cash makes keeping track of earnings a bit trickier, and may require keeping and uploading receipts. You can also manage this with your accounting software and  add the information  to your business financial statements on a monthly basis.

If you are moving to the UK to start a business, you will need to apply for an NI number and can give this number a ring to apply: 0800-141-2075.

Value Added Tax (VAT)

Value Added Tax (VAT) is a tax added to most goods and services. You only need to register for VAT if your VAT taxable turnover is going to exceed the current limit in any rolling 12-month period. The limit is currently is £85,000, and you do not need to include any values from sales that are VAT exempt.

For example, VAT is not added to most food and children’s clothes. Additionally, a lower rate of 5% applies to certain goods and services such as home energy and children’s car seats. The standard VAT rate is 20%.

If you need to register for VAT, there is further information available via  www.gov.uk/vat-registration .

Some insurance policies are legally required, whereas others are available if you want to protect your business against certain risks. Parts of the business that you can insure include your vehicle, equipment, premises, employees, your products and services, your business idea, and even yourself.

Motor insurance 

Insuring vehicles is always required by law. If you are going to be using your vehicle for work, you will need to make sure you have insured the vehicle for the correct class of use. Any claims would be rejected if you use the vehicle for business purposes without amending your policy to reflect this.

There are other motor insurances available to cover things like tools in a van, that would require Goods in Transit cover. You can compare the costs of these policies via  www.confused.com/van-insurance/goods-in-transit .

Professional indemnity 

This insurance is required for certain professions such as accountants and financial advisors. This protects them against claims for losses suffered by customers as a result of mistakes or negligence. Often other professional advisors decide to take this cover out for their own peace of mind in case their customers want to sue them.

Employer’s Liability Insurance

This is mandatory for all businesses with employees. This is to protect you from any claims an employee could make following an accident or illness suffered as a result of working for you.

Additional insurance coverage to consider

Here are some other insurance policies you may want to explore depending on the nature of your business:

• Buildings and contents
• Business Interruption —These policies typically cover any instance where you are unable to operate due to external factors such as inclement weather. The extent of policy coverage fully depends on limitations laid out in your insurance contract.
• Cyber cover — If you have access to information that would be valuable to fraudsters, this will help manage the cost of the incident and deal with enforcement against you from industry regulators.
• Employment Protection
• Keyman insurance
• Money in transit
• Product Liability
• Public Liability
• Shop insurance

It is worth remembering that all business insurances are tax-deductible expenses.

As there are so many insurances to think about, it is helpful to go and speak to a local insurance broker to check you have the cover you need. The  Association of British Insurers  (ABI) website contains a section to help you choose the right insurance for your business.

• Acquire industry-specific licensing

Certain businesses require a license from the local authority to be allowed to trade legally. Some examples include hotels, hairdressers, street traders, boarding kennels, and food outlets.

Contact your local authority and ask to speak to Local Planning or the  Building Control Office  to find out if you need to register or obtain a license, as failure to do so may qualify as a criminal offense.

Local authorities also have Trading Standards departments who help you understand how to be legally compliant in your business area. You will need to know who the regulator of your industry is and then find a way to keep your knowledge up to date to remain compliant.

Do I need planning permission?

While you investigate whether there is a need for a license from the local authority, also ask them if you need planning permission. Working from home or changing the use of a building can both require planning consent, even if you are not changing the physical building.

You can be fined if you set up a business at home without permission. If your work leads to extra foot traffic and a lack of parking, excess noise, etc. your neighbors may end up reporting you.

Ask the Local Planning or Building Control Office about the plans for your business as soon as you can. Planning consent can take time if it is needed and may cost some money, so it is good to have this figured out early on. 

• Employing staff

If you’re going to take on staff you will need to ensure that you comply with certain pieces of employment legislation. Here’s what you need to establish.

Carry out applicant checks 

As an employer, it’s your legal responsibility to make sure you check that any staff has the right to work in the UK. Depending on which sector you work in you may also need to undertake a criminal records check known as a DBS check. Failure to do so can lead to you and your business being liable for a civil penalty.

Register with the HMRC as an employer 

You usually need to register with  HMRC  within 4-weeks of taking on your first employee. You’ll be responsible for deducting any tax and National Insurance contributions from your staff’s pay. You’ll also be responsible for paying any remaining employee or business taxes at the end of the year if you do not plan accordingly.

National minimum wage 

You must make sure that all staff is paid at least the current  national minimum wage  per hour for all the hours that they work. The rate does depend on each employees’ age and if they’re an acting apprentice.

Pensions auto-enrolment 

As an employer, you must enroll all eligible staff into a  workplace pension scheme . There are different pension types that either require you or the government to add a specific matching dollar value to each employee pension. In most automatic enrollment schemes, employees will make contributions based on total earnings, including:

• salary or wages
• bonuses and commission
• statutory sick pay
• statutory maternity, paternity, or adoption pay

Statement of employment 

You will need to issue all staff, who will be with you for more than a month, with a written statement of employment. This document sets out the conditions of their employment, such as hours and pay, and must be given to staff within 8-weeks of their start date. In addition, staff should be given a contract (which can be incorporated with the statement of employment).

The contract sets out details of their rights, responsibilities, and working conditions. Make sure the contract is clear on which terms are contractual and which are not, as this will affect how you can make any changes in the future.

Employers liability insurance 

We mentioned this before, but if you employ staff other than direct family members then you need to take out employers liability insurance. This type of insurance will cover will protect you from claims made by employees if they are injured or fall ill at the workplace.

Health and safety 

All employers are required to provide a safe working environment for their staff. If you have more than 5 staff you will need to have a formal written Health & Safety policy. This includes a safe place to work, safe access to work, safe systems of work, safe equipment procedures, safe interactions between workers, and protection from risks of injury.

• Legislation that may affect your business

Legislations are rules and regulations that you must adhere to whilst running your business. I have not listed all of them as not all will apply to every business, but you will need to identify the ones that apply to you. We will touch on the more common ones, but to explore more legislation please visit  www.legislation.gov.uk .

Employment law

Employment law is there to protect the rights of employees and their health and safety. We will touch on the main laws to consider for those employing staff.

Health and Safety at Work Act of 1974

Premises and machinery must be safe and not affect the health of workers. If you employ 5 or more staff you need to have a written health and safety policy and conduct risk assessments which need to be documented and communicated to the employees.

Equal Pay Act of 1970 

Employees must be paid equally to those who do work of the same value regardless of their sex.

Sex Discrimination Act of 1975 

Employees cannot be discriminated at any stage of recruitment, training, or employment.

Race Relations Act of 1976

It is illegal to discriminate against a person because of their color, race, or ethnic group.

Employment Protection Act of 1978

Employers must provide employees with a written contract of employment. This is to protect them from unfair dismissal and gives them the right to redundancy pay should their job no longer be required after 2-years.

Consumer Protection

Consumer Protection rights are there to protect customers from unfair business practices.

Sale and Supply of Goods Act 

Goods must be of a decent standard. This applies to any goods that are identified and agreed to be purchased by consumers.

Trade Descriptions Act 

Goods and services must be as advertised and you must not give misleading information.

Distance Selling Act 

Some selling methods, such as online shopping, require you to allow a ‘cooling-off’ period, during which time a customer can change their mind about a purchase and obtain a refund. 

Data Protection Act/GDPR

This will apply to anyone that needs to take any customer details, so it will apply to the majority of businesses. You’ll want to make sure you fully understand the extent of these protections and can check the  Information Commissioner’s Office  for specifics.

• Develop internal legal documents

Developing internal legal documents helps to instill confidence in your business for the benefit of everyone — your customers, employees, and potential investors.

Privacy policy

A  privacy policy  is a statement that tells your customers how their data will be collected, used, stored, and protected. It should also detail if there may be a need to share any personal information.

Company handbook

Your company handbook is something you will probably change and add to as your business grows. In short, it is really a book to summarise how you do things in your business. It needs to be made available to staff at all times — you could either give everyone a copy or make it otherwise easily available for reference. Here’s what to include.

Your company mission statement

Your employees want to know the goals and reasons for your company’s existence. This is where your  mission statement  comes into play. Generally, it should include the history of your company, the vision, and the goals you want to achieve.

Your company’s policies 

Your company policies are typically extensions of required legal stipulations along with any additional company-specific policies. This can be anything that is important such as having a clear desk policy outside of office hours to help protect data or even just the way you want staff to answer the phone.

Human resources and legal information related to employment

If you don’t have an HR department to help you outline every policy, you’ll need to address the following:

• Joining the company 
• Employee benefits
• Working hours 
• Annual Leave and sickness absence
• Absence management –policy for managing short and long-term absence and requirements for reporting
• Bribery, confidentiality, whistleblowing, and data protection
• Equal opportunities and  bullying and harassment policies
• IT rules (including areas such as social media use both inside and outside of work)
• Your Health and Safety policy including how you intend for you and your staff to implement this 
• Disciplinary/Grievance procedures
• Flexible family-friendly legislation policies
• Capability and performance management targets and procedures
• Termination of employment including retirement and redundancy

It is a good idea not to make any company policies contractual for staff so you can amend the staff policies in the employee handbook at any time.

• Retaining legal counsel

It is useful to have a solicitor on retainer so that you can get advice whenever you need it. When starting and operating a small business you probably won’t need a solicitor often, but having phone support available for when you do will be beneficial.

There are large national organizations that offer this service such as  Peninsula Group Limited , but you may prefer to ask a local solicitor or a more friendly and personal service.

• Why develop a legal action plan?

Incorporating a legal action plan into your larger business plan may be necessary when pitching to investors or applying for funding. It’s also valuable to incorporate specific legal steps into your milestones to better use as a management tool.

Now, this guide has covered a lot of different legal components, so you may find it easier to write a separate legal action plan. Since Employment Law is such a large part of legal planning, if you do not plan to hire any staff and will operate by yourself, you might just need a simple legal checklist.

In any case, be sure that you have some sort of plan in place to be sure you address everything.

Don’t get overwhelmed by legal requirements

This all may seem daunting as there is so much to think about, but I hope that this guide helps you to plan and meet your legal obligations. It is best to start off small but keep the big picture in mind. Keep referring back to your traditional business plan so as not to lose sight of what you dreamed of.

If you ever have questions or concerns about specific legal requirements, check the official UK government website or reach out directly to a legal expert for assistance. Best of luck with your new venture!

Editors’ Note: This article is purely informational and should not be taken as legal advice. If you have questions regarding specific laws, licensing or protections contact your preferred legal counsel. 

Holly is the Managing Director of Finance with a background in mortgages, compliance, complaint handling, and internet marketing. Outside of work she enjoys playing video games with her son and making things at home.

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How to Create an Office of Legal Aid Business Plan

This legal aid business plan template has been designed to help your business plan and make it easier for you to understand how the legal aid business works and how it will be funded. The law is a very important subject.

There are laws in place to protect us and laws that govern us. If you want to start an office of legal aid business, then you need to make sure that you have the right kind of plan to make sure that you’re able to get a business loan to set up your business.

A business plan is a document that shows the financial viability of your business, your market share, how much profit you will make, how you will make it happen, and what kind of returns you can expect from your venture. A good business plan is not just a set of numbers. It’s a road map. It shows where you want to go and how you will get there. We’re here to show you exactly how to create an office of legal aid business plan.

What is an office of legal aid?

An office of legal aid is a small law firm funded by public or private donations. They provide legal services for free or for a nominal fee.

“legal aid” refers to the legal representation available to the poor, the disenfranchised, the victims of injustice, or the oppressed. In other words, legal assistance is open to people who can’t afford to pay.

How to create a business plan for legal aid

A business plan is a document that shows the financial viability of your business, your market share, how much profit you will make, how you will make it happen, and what kind of returns you can expect from your venture.

Investors usually require business plans when they give money to startups. The legal industry is one of the most competitive industries out there, and it is one of the hardest to break into. So before you start working on a business plan for your legal business, you should know your competition by looking at what their clients need and what services they offer. Once you have that information, you can start making a business plan for legal aid .

Here are the steps you need to follow:

1. Analyze the competition

2. Identify your target market

3. Gather your resources

4. Write a detailed mission statement

5. Set up a timeline

6. Research your business idea

7. Design your logo

8. Create a website

9. Create your marketing strategy

10. Create a budget

11. Set up your accounting system

12. Set up your legal forms

13. Start your business

14. Monitor your progress

15. Set up your business plan

What are legal aid business plan components?

Business plans are also useful for investors and banks..

Investors and banks can use a business plan to see if the business is worth investing in and if the company is viable. Banks can loan money to companies based on their projections of future profits.

What should you include in it?

You will probably need to include the following information in your business plan:

A summary of what your business is

A brief history of your business

The purpose of your business

Who is your target market

What makes your business different from others

How are you going to differentiate yourself

Your financial forecast

How are you going to make money

Your marketing plan

How are you going to market your business

Your legal structure

Your target clients

Your target customers

A business plan is a blueprint for your future.

It is the foundation of your success.

Sample Budget Spreadsheet

A budget spreadsheet is a simple tool that helps you keep track of your expenses and revenues. The budget spreadsheet in this sample is designed to help determine whether you should be opening a legal aid office.

You’ll find all your income and expenses, including your monthly payment, fees, annual revenue, and the difference between the two.

You’ll also find your breakdown by category, including the number of cases you work on, your cost per case, and your net profit.

This is a sample, but you can adapt it to fit your business and needs. The spreadsheet is easy to customize, so you can add columns and rows as you see fit.

Frequently Asked Questions Legal Aid Business

Q: Is this a guide for new legal aid lawyers or existing attorneys?

A: It guides legal aid attorneys who want to start a legal aid office in their community. If you are a new lawyer, we suggest starting with a legal aid organization in another city. You can also work with a legal aid organization in your community and then move to another town to practice law.

Q: Why should I create an office of legal aid business plan?

A: Legal aid organizations are becoming more and more common in communities across America. Legal aid lawyers need to know about the services offered by legal aid offices and how to start one independently. This guide will help them with that.

Top Myths About Legal Aid Business

1. Legal Aid needs a big budget to be effective.

2. Legal Aid needs a lot of money to attract enough clients to make it profitable.

3. An office of legal aid must have a waiting list of clients.

I have seen many legal aid plans that are poorly written. They contain many unnecessary details and don’t address the primary reasons a legal aid plan is needed. The result is that they are difficult to understand and often too complex for the average person to use. If you are looking to start a legal aid business, you’ll need a legal aid business plan that will allow you to quickly develop a plan of action that is practical, realistic, and easy to understand.

I am a lawyer by profession and a blogger by passion. I started blogging to express my views on various issues.The blog has now become one of my passions. After seeing so many of my friends and colleagues using blogs for their business purposes, I decided to share my views through my blog.I love reading other people's blogs. I am trying to write one every day, and sometimes when I have time I write two or three posts per day.

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